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Why Broadband CPE Lacks Meaningful Innovation

The device that broadband service providers place in a subscriber's home could be a point of differentiation, but most are basically alike. The vendors merely attempt to reach parity with the stated industry standard requirements. The products are often procured based upon the lowest price.

It's surprising that there is no start-up company that's truly attempting to disrupt this product category. Surely, the service providers would notice if anyone created some meaningful and substantive innovation. Telecom and cable companies have said that they crave vendors that offer new ideas.

Worldwide broadband customer premise equipment (CPE) shipments are expected to reach 151.9 million by the end of 2014, according to the latest worldwide market study by ABI Research.

"The residential gateway segment continues to grow at a rapid pace. We expect global shipments will grow more than 9 percent in 2014," said Jake Saunders, VP and practice director at ABI Research.

Although DSL and cable CPE device shipments still dominate the market, DSL and cable shipments are likely to drop slightly in 2014, due to slow subscriber net additions.

However, as subscribers continue to switch to more advanced broadband access, VDSL and DOCSIS 3.0 device shipments continue to grow robustly.

North America and Europe are the regions with the highest VDSL device penetration. This is because operators in Western Europe are upgrading DSL infrastructure with VDSL and VDSL vectoring technologies.

Total VDSL CPE shipments in the two regions account for around 50 percent of worldwide VDSL CPE shipments.

DOCSIS 3.0 devices dominate the cable CPE market. ABI Research expects shipments will grow 11 percent in 2014, representing nearly 85 percent of total cable CPE shipments.

The expansion of the fiber-optic broadband subscriber base is a key driver of the rapid growth in fiber-optic CPE shipments. In 2014, fiber-optic CPE shipments are likely to grow around 16 percent YoY from 2013, reaching 41 million.

ZTE has the top position in the fiber-optic CPE device market in 3Q 2014, followed by Huawei.

ZTE also has the top ranked position in the overall broadband CPE market. ARRIS has the second largest market share in the overall broadband CPE market, followed by Huawei.

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