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iSuppli: STB market to remain in flux

Posted: 21 Oct 2008     Print Version  Bookmark and Share

Keywords:High Definition  Digital Video Recording  Set-Top Boxes 

Whether looking at the technology or the business aspects, Set-Top Boxes (STBs) should remain one of the most dynamic areas of the electronics industry for at least the next decade, and quite possibly beyond, says iSuppli Corp. The form that the STB may ultimately take is uncertain, but what is certain is that the next decade's version will look and function quite differently from the box sitting in most people's living rooms today.

Over the next few years, much of the STB market will be driven by expanding box capabilities. For millions of consumers worldwide, High Definition (HD) and Digital Video Recording (DVR) have become technological necessities of life that they just can't do without. In fact, HD and DVRs are becoming such a part of consumer lives that by 2012, more than 70 per cent of digital STBs shipped are expected to integrate support for one or both of these technologies, up from about 35 per cent in 2007 according to iSuppli Corp.

"DVRs are cheap to integrate into STBs because Hard Disc Drive (HDD) costs have plummeted so much," said Jordan Selburn, principal analyst for set-top boxes for iSuppli. "With the street price of storage just pennies per gigabyte and falling daily, the time is not far off when video storage hardware, whether at home or remote, will be both essentially limitless and virtually free. With cable or satellite companies only charging $5 (Rs.215.05) or so a month for DVR support, who wouldn't want the ability to record their shows and movies?"

"HD falls into a similar category as DVRs," Selburn said. "HD video processing chips are migrating to 65-nanometer semiconductor manufacturing technologies, causing their incremental costs to drop compared to standard-definition devices. HD display prices are falling rapidly as well. iSuppli forecasts that more than 12.5 crore (125 million) of these displays will ship in 2008, and customers will demand HD content to watch on their new televisions."

HD technology

With a perfect storm of lower-cost HD technology, increasing HD content and greater high-speed Internet access, HD will become the mainstream resolution by 2012. This is likely to be a one-time transition, however. While companies are beginning to develop the so-called "Quad Definition" displays with twice the resolution of HD, most consumers will never need to adopt this technology.

"In most cases, today's HD displays have greater resolution than the human eye can discern," Selburn said. "Except for those few people buying garage-door-size displays, you will not notice any improvement with Quad Definition—unless, of course, you happen to be an eagle."

The STB evolution won't stop when HD and DVRs become the norm, however. In the long term, media hubs and home gateways are destined to supplant today's one-box-per-set approach. Not only will this lower costs, it will enhance the user experience as well by serving video to all displays in a home from a centralised location.

"We aren't there yet, but it is possible in the long term," Selburn said, speaking about the media hub/home gateway approach. "Recording a show in one room and watching it on a device anywhere—that's the ultimate media-centre scenario. And with unlimited storage capacity and wireless connectivity inroads, we'll get there."

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