Drivers for the Service Provider Marketplace
Let me start by saying service providers are in a great marketplace. And I’m talking about service providers worldwide. This includes the cable companies and wireline providers, and in many cases the programmers and broadcasters. As we look at the overall market, there are a number of product and service advancements fueling service provider growth that stand out. The bundle is one of the most important drivers in the marketplace right now. The bundle is working. The common strategy is to lock in the customer who is buying more, while paying less for the bundle. Then you develop customer loyalty, reduce churn and use the devices that are in the home, and up-sell new applications.Next, the goal is to protect the bundle. How do you do that? You keep the enhancements coming, and keep the applications coming in the bundle. And they don’t necessarily have to be new applications that cost a lot of money. Another driver is the DVR. DVR penetration is continuing to grow and is continuing to be a major driving force in the marketplace. Time shifting is something everybody wants. Remember the days of 500 channels and nothing to watch? Well now you can watch what you want to watch, when you want to watch it, at your convenience. In some cases you can even move it around and place shift it.HDTV is a phenomenon. Across the U.S. we’re seeing flat panel TVs for less than $900. More and more programmers are shifting to full HD content. Our willingness to buy it and watch it is mostly driven by sporting events, but soon it will be expanded by movies and all other formats of television. And it’s a major phenomenon. So what does it do to the network? Video on the edges of the network demands more bandwidth, more router capacity and a better managed network, and the best way to do that is with an IP converged network. So this increased demand for HD is both a service and network expansion driver. New technologies, such as MPEG-4 AVC encoding, can drive business opportunities by supporting upgrade cycles so that service providers can stay ahead of the power curve and continue to grow revenues. And the last driver, but not the least, is the desire to attract new customers and keep existing ones, which loops us back to the importance of the bundle, plus HDTV and DVR services.I don’t think there has ever been a more dynamic, opportunity-filled time to be in the service provider business. New opportunities seem to appear every day, and we’re excited about the ways service providers continue to use our end-to-end solution to drive innovation in the marketplace.