Set-Top Boxes sold into the up-and-coming Internet Protocol TV segment will ramp up in terms of shipments and revenue in the years to come, offering increasing competition to legacy products in the STB market, according to iSuppli.

In the recent report iSuppli says STB equipment sold into the IPTV market is projected to grow to 58 million units in 2014, up from 19.4 million in 2009. Revenue will rise to $6.2 billion, up from $2.9 billion in 2009.

For these IPTV STBs, which allow the delivery of television services over a high-speed digital network and provide guaranteed quality of service, the numbers translate into a Compound Annual Growth Rate (CAGR) of 25 percent for unit shipments and 16 percent for revenue.

All told, IPTV STBs accounted for 14.7 percent of total set-top box unit shipments in 2009, and are expected to make up 29.1 percent of shipments in 2014.

In order to fulfill the promise of exciting interactive applications held forth initially by the IPTV industry, iSuppli believes further innovation is needed to differentiate IPTV services from those offered by the cable and satellite providers.

In comparison, the legacy STB market consisting of the cable, satellite and terrestrial segments will end 2009 with unit shipments of 132 million. Unit shipments for this market are projected to reach 199 million in 2014, rising at a CAGR of 8.6 percent for the forecast period.

IPTV Players and their Crowded Playground
According to iSuppli, the principal difference between legacy STBs and their IPTV counterparts lies in the way the boxes receive information: IP STB equipment receives video content over a broadband pipe via Internet Protocol data packets, while legacy boxes receive an RF-modulated signal. Furthermore, IP boxes do not require a tuner and demodulator, which are requirements for legacy boxes.

With more than 60 vendors claiming to have an IPTV STB product, the IPTV equipment market remains highly fragmented. However, just 15 vendors supplied 92 percent of the market in 2009. Motorola Inc. was No. 1 with 32 percent market share, followed by Cisco Systems Inc. with a 14 percent share.

Among companies involved in supplying the platform software for IPTV boxes, Microsoft Corp. held sway with its Mediaroom middleware, accounting for 25 percent of the market with 4.8 million STBs in 2009. Microsoft had three times the share of its closest rival—French-based Thomson SA with its SmartVision software.

As in the PC industry, Microsoft is driving the technical requirements that will shape product offerings from silicon vendors and makers of STBs alike, iSuppli believes.

Next-generation media processors will also ramp up in 2010. Newcomer Broadcom Corp. is expected to lay siege to Sigma Designs with its BCM7405 processor—recently certified for Mediaroom deployments—ending the advantageous position of Sigma Designs as sole provider of Mediaroom-certified processors.

Nonetheless, Sigma Designs is expected to fire back, and its next-generation SMP8650 family of processors will benefit from the company’s incumbent position in many existing IP STB sockets.

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