Eliminating the TV-top stack A unit of Motorola based in Horsham is manufacturing a box that does it all. It replaces your cable box, DVD player, VCR, and HDTV signal converter.

Posted: May 21, 2003

When did watching television get to be so difficult?

Where once there was just a TV set, now we also have VCRs, cable boxes, DVD players, digital video recorders, high-definition signal converters, and remote controls, all fighting for the same space across from the living-room couch.

A Horsham-based division of electronics giant Motorola Inc. is working to make it simple again.

Motorola Broadband Communications Sector, the nation's largest supplier of cable set-top boxes, says it will begin in-home trials this summer of a souped-up box that receives high-definition channel feeds, processes video-on-demand requests, and digitally records programs on the fly  la the increasingly popular TiVo.

The super-tuner is but one element in the company's vision of a "connected home," in which fast-Internet technology, including cable modems or digital subscriber lines, will be used to pipe information and video to devices throughout a household.

"Our focus is on broadband-enabled access," said John E. Burke, corporate vice president and general manager of Motorola's broadband communications sector.

While that vision includes gadgets that wirelessly beam music from one room to another, and home-monitoring systems that can be watched and controlled via the Internet, the company's "in" to most people's living rooms will continue to be, for now, the ubiquitous cable-TV box.

The new DCT 6208 includes all the workings of today's basic cable boxes, plus an HDTV receiver, a digital video recorder, and a broadband modem for applications not yet developed and perhaps not even envisioned. Motorola is promoting it as a boon for cable companies that are worried about losing market share to satellite-TV services.

"This is the satellite crusher," Sal Macera, senior product manager for the DCT 6208, said at a national conference for cable engineers in Philadelphia last week.

As with stand-alone digital video recorders such as TiVo, the Motorola machine enables time-shifting of TV-watching, so you can take breaks without missing a shred of DNA evidence on CSI, or automatically record the show for viewing days after its original broadcast.

Analysts see such technology, along with video on demand, as critical in the cable industry's battle to fend off the satellite-TV services, which already make digital recorders available.

Motorola sells network equipment both to satellite providers, such as DirecTV, and to cable firms. In the world of digital recorders, however, "Motorola is playing catch-up," Jupiter Research analyst Lydia Loizides said.

Motorola arch rival Scientific-Atlanta Inc. has already shipped at least 106,000 of its recorder cable boxes, Loizides said.

Satellite subscribers with digital-video-recorder service typically spend $10 to $20 more a month than those without the recorders, and their defection rate is less than half that of those who do not use recorders, according to Kagan World Media.

"Stats like these could cause more in the cable industry to jump on the DVR bandwagon," Kagan analyst Derek Baine wrote recently.

Loizides said a number of pricing plans could emerge, but the one that would probably stick was for cable companies to charge about $10 a month for the super-tuner box.

So how does this sit with Comcast Corp., the No. 1 cable company, with more than 21 million subscribers?

"DVR technology is an enhancement to our video-on-demand service, offering customers even more convenience and control," Mark Hess, vice president of digital services for Comcast, said.

Comcast is testing, or will test, digital recorders from at least three manufacturers, including Motorola, over the coming year. Motorola's version should become available to Comcast customers later this year, but prices have not been set, according to the company.

Times have been tough recently for Motorola Broadband, which was known as General Instrument Corp. until Motorola, of Schaumburg, Ill., bought it in 2000 for $17 billion. The division employs 4,500 people nationwide, including 1,000 in Horsham who do research, planning, engineering, product management, finance and sales, among other functions.

The division's products, such as cable boxes, are made in Mexico and Taiwan.

Sales have suffered lately because cable companies - faced with tougher scrutiny from financial analysts - have been spending less on the types of equipment the company supplies, according to parent company Motorola's latest 10-K filing with regulators.

In the first quarter of 2003, sales for the broadband division - which accounts for about 7 percent of Motorola's total sales - were down $120 million, to $405 million. The company said it expected sales for all of 2003 to be down by between 10 percent and 15 percent.

Another potential obstacle is that AT&T Broadband and Comcast together make up 40 percent of Motorola Broadband's sales. Their 2002 merger into a much-larger Comcast could presage further industry consolidation that could hamper sales as bigger companies demand bulk discounts, Motorola said.

And in December, major makers of consumer electronics agreed with cable firms to develop a "plug-and-play" standard that could render cable set-top boxes obsolete.

Such changes "could impact the strength of our competitive position, and our sales, and profitability," Motorola's financial statement said. "Most of our sales and profits arise from the sale of our set-top terminals."

In interviews, company officials downplayed the threats to their business. Burke, the Motorola Broadband manager, pointed out that, even after TVs include more built-in capabilities, such as digital-cable decoders, someone will have to supply those innards to TV manufacturers.

Officials also point out that the consumer-products portion of the division's business forms just a part of its strategy in the cable market.

From the cable box in your house to the building from which the cable company disseminates programming to customers' neighborhoods, Motorola products abound. The vast majority of it is equipment to run the network, and is never seen by cable customers.

"We offer the end-to-end solution" for cable operators, said Dan Sutorius, vice president of market development for the company's digital media systems unit. "We're not just a widget."

Contact staff writer Akweli Parker at 215-854-5986 or aparker@phillynews.com.

|
|
|
|
|