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Confusion Regarding Future IPTV STB Demand

Driven by increasing Telco IPTV deployments, demand for IP set top boxes (STB) is growing, and will reach 19 million units in 2010, up from 4.3 million in 2006, reports In-Stat.

New STB vendors have entered the market within the past year, the high-tech market research firm says, but the important box features -- HD, DVR, and digital terrestrial tuners -- have not changed.

Furthermore, if policy changes in the U.S. are any indication of a trend, it's not apparent to me how the vendors in this sector will be adapting to a marketplace where open-standard STBs will be sold directly to consumers.

"There was consolidation in 2006, with Motorola buying Kreatel and Cisco integrating Scientific Atlanta with Linksys and KiSS," says Michelle Abraham, In-Stat analyst. "We see more definitive leaders emerging in IP set top boxes, though the leaders differ by geography."

According to Kagan Research, starting on July 1, a Federal Communications Commission (FCC) mandate will now ban cable companies from forcing their subscribers to use proprietary integrated set-top boxes, with few exceptions.

Surely, this same mandate will also impact demand for Telco IPTV set top boxes, as the sales distribution model evolves. If that change is not built into new STB forecasts, then I'm confused.

In-Stat's market study found the following:

- DVB-T tuners will be integrated into many boxes for Europe.

- More vendors are offering integrated home networking technologies.

- Component prices will decline, allowing the Bill of Materials (BOM) for an SD H.264 decode-capable box to drop from over $100 in 2005 to $54 in 2010.

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