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Cisco’s “Pole Position” Driving Service Provider Video Infrastructure Investment

If you read the trade press, service provider video business models are under assault.  IPTV operators are challenged by the high cost of video services, while traditional pay-TV operators are seeing growing OTT traffic threatening their cost and revenue structures.  Amidst all this, ACG Research recently reported that the service provider video infrastructure market grew 4.5% sequentially in Q2 2011, to $3.5 billion.  According to ACG, Cisco grew its market leadership position in the overall service provider video infrastructure market to 41.9%, added three share points in the CMTS market to 65.8%, and gained a commanding 34.6% share in the IPTV set top box market.

What’s contributing to this growth? Two factors: an evolving understanding of video, and an appreciation of the shifting composition of network traffic.

Video is not just content, it is an experience

A major transformation in consumer behavior is underway, driven by the proliferation of IP-connected video-enabled devices (i.e., smart-phones, connected TVs, tablets, IP STBs) and the proliferation of video services (i.e., Amazon, BBC iPlayer, Hulu, Netflix, YouTube).  Consumers are not just watching more content, but making decisions regarding their content experience: what, where, when and how they consumer content.  The ability to control content experiences is a growing consumer demand.  And Cisco is helping service providers respond by offering solutions which provide common and immersive end-user experiences that consumers value.  By innovating around video experiences, service providers can increasingly monetize video traffic.

Broadband build-out for video

The Broadband Forum recently announced that, according to figures compiled by Point Topic, there were 558 million global broadband subscribers by the end of first half 2011, which is roughly 8% of the world’s population.  Looking ahead, Cisco’s VNI projects that by 2015, roughly 3 billion people will have Internet access, about 40% of the world’s population – a five-fold increase! More significantly, by 2015, Cisco’s VNI projects that video will make up over 90% of global consumer traffic. Supporting this network traffic composition requires scaling infrastructure across the core, edge, and access portions of service provider networks to expand bandwidth and intelligently route growing video payloads.

No wonder that ACG Research forecasts strong five-year CAGRs in the service provider core (15.5%), edge (18.5%), and cable access/CMTS (14%).  And Cisco continues to lead service provider adoption of video infrastructure solutions.  In the core, over 450 service providers have deployed the Cisco CRS, including over 80 CRS-3 customers. At the edge, Cisco’s ASR 9000 has garnered over 500 service provider customers who can control the cost of scaling by taking advantage of new nV technology to virtually expand their edge routing platforms. In cable access, Cisco’s uBR10000 CMTS platform continues to gain market share and offer enhancements such as density and cost improvements with the 3G60 line cards.  And service providers are increasingly looking to Cisco for their cable, IP, and hybrid STB solutions, with customers such as Virgin Media in the UK and ONO in Spain.

Market share, although important, is a story about the past. At Cisco, our Videoscape architecture is a story about the future, which provides service providers with solutions for evolving their current infrastructure to be able to innovate, optimize, and monetize growing video traffic.  We’re pleased to see our story resonating so strongly with our customers.

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