Cisco Leads Video Infrastructure Segment
On December 23 - while most folks were finishing off their Christmas shopping and heading out in trains, planes and automobiles - Synergy Research Group released some interesting information about the worldwide state of the video equipment segment.
There is a good deal to be learned from the study from a couple of different angles. John Dinsdale, a chief analyst and the research director for SRG, told BTR that though the numbers are worldwide, the basic assessments hold true for North America as well. He also indicated that cable operators represent about half of the service providers in the study (48%), with telcos at one-third, satellite/direct-to-home firms at 17% and others with a couple of percentage points each.
The trend over time is away from cable and toward the telephone companies. That makes sense - in a study that looks at video. The trend line likely would be opposite if the subject matter dealt with telephony.
The study research suggests how segmented the overall market is. Cisco's highest percentage is in content distribution, where it owns 35% of the market. That is not, however, overwhelming market share. In the media data center category, the leading percentage only is 17%.
SRG said the total worldwide sales for last year's third quarter was $9.4 billion and that annualized growth was down about 2.5%.
Within those overall numbers, there are great variations between subgroups, Dinsdale said, noting that the video client side is mostly flat. Content acquisition and preparation (elements like encoders and transcoders) are down a bit. The content management system segment is slightly up. The growth in the overall video distribution sector, he said, is in data centers. And that growth, he said, is being driven by the telcos.
The ebb and flow of the subsidiary categories has a lot to do with the nature of the industries. Clearly, cable companies and telcos form the lion's share of the overall segment. When it comes to video, the two industries - despite the fact that they have been getting into each other's businesses for a decade or more - still have very different networks to feed.
Dinsdale pointed out that the reality is that cable operators want to squeeze as much life as they can out of the legacy QAM networks that they run. The transition to IP is a necessity and one that they are undergoing - but one in which the timing will, to some extent, be determined by the ability to recoup their old investment. "They want to sweat the investment as much as possible," he said.
The telcos have no such countervailing force to their investment approach to IP video. While the train has slowed down somewhat since the height of Verizon's (NYSE:VZ) FiOS build, telcos are more apt to spend on IP-based video infrastructure both because they have more greenfield territory (from a video perspective) and less legacy to protect.
Carl Weinschenk is BTR's Senior Editor. Reach him at [email protected].