IPTV market shows strength across all regions, says Lowe
Jun 26, 2007 1:00 PM
IPTVU: You identified promotion and consumer awareness as needing to be ramped up to take IPTV to the next step in the United States. So if I understand you properly, the technology is in place. Now it’s a matter of marketing and promotion?
KL: Sometimes the best learning mechanism is a parallel comparison. For a while, systems have been marketed fairly heavily in France by a company called Free Box and in Korea by Hanaro Telecom. Both of those situations were areas where people hadn’t been buying much IPTV.
In both cases — completely different market spaces — the reception was very good and exceeded their initial demand expectations. Free Box has continued to exceed what they had been expecting each quarter, and I think that’s a demonstration of the satisfaction and word of mouth spreading that IPTV is something to be looked at, and I think the same will be true in the U.S. when telcos like AT&T, et al. start to turn on their services and start to promote the offering. I think it’s going to become a big uptake in demand.
IPTVU: How has this demand affected Sigma Designs?
KL: It’s interesting because when the IPTV market potential shot up in a big way a little over two years ago, the heat was really turned up, and everybody wanted to get the technology puzzle solved so they could start turning on the services as soon as possible.
Most of the carriers were fairly open about investing heavily into the high-speed DSL networks that they’re going to offer. The main service that justified putting that infrastructure in place was high-speed Internet, but at the same time video services represented a strong upside potential as an add-on. So, there has been a lot of pressure to get these solutions solidified, to get them out into the market, to get things ramped up.
Sigma has worked closely with both the Microsoft TV camp as well as the Linux camp to produce world-class IPTV offerings. We had a long legacy of mining this market with smaller carriers, so we have a lot of experience in the software layers it takes to make the real-time system work. Fortunately, that technology is what has allowed us to be a key enabler in the market as it takes off and being a technology solid enough.
I think moving forward, the challenges is migrating into how to raise the feature content of the services — how to provide enough headroom for the software so it can expand and add more feature value add.
The IPTV set-top boxes being deployed today are head-and-shoulder above any boxes in cable or satellite. These are extremely powerful boxes, and there is a wealth of feature upgrades that every one of these telcos envisions as they move into the future.
IPTVU: And that’s affecting the company’s performance?
KL: Sigma Designs is living proof that IPTV has taken off and has become a real deployment in the world at this time.
We’ve had strong double-digit growth and sequential double-digit growth from quarter to quarter for the last five quarters. That’s being driven by IPTV. Virtually all of our other businesses are still in the offing. IPTV has represented the vast majority of that growth. Sigma Design has about 75 percent or more of the IPTV set-top box market when it comes to the media processor chipsets. So we are probably the best bellwether that exists in the market today for looking at what’s happening with IPTV. As a company that’s almost a pure play today in IPTV, we are a good indicator for someone who’s trying to track IPTV and learn what’s going on and what are the important technological trends.
IPTVU: What impact will the heavy use of the Internet by consumers to stream and download video have on consumer acceptance of IPTV as a multichannel alternative in the market?
KL: I think what’s happening is the telephone companies more than anybody are creating plans and programs to embrace the changes in the ecosystem for delivering information and content into the home. They are looking at the interaction and crossover between the traditional use of the Internet and moving over to things like You Tube and other things people use to access video content, such as SlingBox to feed people their television programs remotely. There are a lot of programs right now being developed to embrace streaming video and incorporate that as part of the overall but making it more convenient to use. Rather than trying to reject this trend or ignoring it, they are doing the smart thing, which is putting in place development programs to integrate the range of Internet video uses into consumers’ homes into one cohesive offering.
IPTVU: Is there anything else you’d like to add?
KL: There are a number of synergies occurring as we move toward the era of widespread HDTV. As consumers, we’re buying various products to give us new-generation high-definition capability in the home, including televisions, set-top boxes and players. When you look down under the hood and look at the technologies that are enabling this to happen, there’s a paradigm shift going on out there. The entire market space for media processor technology is moving to a winner take all. Years ago there were separate components under the hood for DVD players, set top boxes and televisions. Today, that is converging. To a certain extent that is a good thing for everybody because it is raising the quality bar and ensuring more consistency between the various consumer systems.
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