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Digital Cable Set Top Box Revenue Bonanza

2006 was a very good year for cable set top box manufacturers. In fact, it was the best year ever, according to In-Stat research.

Last year, worldwide digital cable set top box unit shipments hit a record 27.5 million, a significant increase over the 15.6 million units shipped in 2005. In conjunction with the huge increase in unit shipments, digital cable set top box revenues also set a new annual record.

Worldwide product revenues last year reached $4.2 billion, up from $3.1 billion in 2005. So what exactly was behind last year's cable set top box bonanza? In a nutshell, there were three things:

- Demand for digital set top boxes in China skyrocketed.

- The shift from analog cable TV service to digital cable TV service, especially in North America and Europe, remained.

- Strong demand for high-end digital cable set top boxes, particularly PVR-enabled or HD-capable boxes, continued to boost unit shipments in North America.

The number one driver for last year's record unit shipments and revenues was the spike in demand by Chinese cable operators for digital cable set top box products. China, with its 107 million cable TV households, has historically been an analog market.

However, with Chinese cable operators rapidly rolling out digital video services in many metropolitan areas, demand for digital boxes is on the rise: Total Chinese digital cable set top box unit shipments exceeded 9 million last year, up from just over 2 million in 2005.

2007 is shaping up to be another good year for the cable set top box market. Even with the looming June 2007 integrated security ban in the U.S., In-Stat is forecasting another solid year for cable set top box manufacturers.

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