Cisco to buy NDS, sell STB manufacturing?
Value creation in pay-TV distribution is shifting from CPE to software. Cisco is not alone in thinking this.
Value creation in pay-TV distribution is shifting from CPE to software. Cisco is not alone in thinking this as Pace is making a similar shift from hardware-based solutions to its Elements software platform on a range of STBs.
Cisco has strong head-end and network solutions, but any user of a Cisco set-top box will not have kind things to say about their STB software. NDS is perhaps the perfect complement to Cisco’s Videoscape strategy, being the premiere creator of set-top box software solutions. The combined company would provide security for an estimated 30% of all active set-top boxes that support encryption.
However, with the exception of Cisco and Motorola, conditional access (CA) businesses generally operate separately from set-top box businesses. The reason is that operators want to have multiple set-top box vendors but are resigned to having single security vendors and software vendors. North American cable is the only major exception to this rule.
Therefore, it may now make sense for Cisco to sell its set-top box and broadband gateway manufacturing unit while retaining its PowerKEY conditional access system and a few other pieces of Scientific Atlanta that are integral to the Videoscape strategy. To take any other path might threaten the value of the existing NDS business.
I would note that the need to spin-off the set-top box business is not nearly as strong as it is in the Google acquisition of Motorola; it is probably manageable. However, the combined business would have some conflicts of interest with customers that weren’t there before.
It should also be noted that no Cisco STB (or PowerKEY) customer except Cablevision is also a major NDS customer.
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Before the calendar turned, 2016 already had the makings of a pivotal year for manufacturing, and for the world.
There were the big events for the year, including the United States as Partner Country at Hannover Messe in April and the 2016 International Manufacturing Technology Show in Chicago in September. There's also the matter of the U.S. presidential elections in November, which promise to shape policy in manufacturing for years to come.
But the year started with global economic turmoil, as a slowdown in Chinese manufacturing triggered a worldwide stock hiccup that sent values plummeting. The continued plunge in world oil prices has resulted in a slowdown in exploration and, by extension, the manufacture of exploration equipment.
Read more: 2015 Salary Survey