Recently a report surfaced that Cablevision (NYSE: CVC) was ready to start hammering nails into the coffin of the Motorola-Cisco cable set-top box duopoly (see it here). The report, by an informed reporter with excellent sources, suggested that Cablevision would lead the rest of the cable operators, who, like the dominoes they can be, would fall into line behind the Long Island operator and start using Samsung boxes for their tru2way plays.
It all makes sense. The FCC wants cable to open up its all-too-tight grip on subscriber electronics, and tru2way is the path to not only open up but deliver more applications. The industry has paid lip service to the idea of opening up (but of course it's also pledged to improve customer service and look where that stands), and consumer electronics companies, not just Samsung, are eager to get a big piece of a cable pie.
The only thing standing in the way is that silly little duopoly that everyone but the members of the duopoly and (secretly) members of cable's inner sanctum hate. Motorola (NYSE: MOT) and Cisco (Nasdaq: CSCO)? With the exception of cell phones, modems and routers, those guys aren't consumer electronic household names; they certainly don't build televisions. It should be easy to nudge them aside and let the big boys play.
History is not on the side of the newcomers. While a case could be made that Microsoft (Nasdaq: MSFT) has been lurking around cable TV since Bill Gates started shaving and Apple (Nasdaq: AAPL) and Google (Nasdaq: GOOG) are making menacing noises, the last true threat to the cable duopoly came in 1999 when, not ironically, Cablevision pledged its troth to Sony (NYSE: SNE) in a $1 billion deal hyped during a visit by Hurricane Floyd to New York City.
"This is clearly another step in realizing Sony's vision of the networked home," said Howard Stringer, chairman and CEO of Sony Corporation of America, during the high-flying press conference call. "Being a technology and content provider gives us the opportunity to design something together (with Cablevision) rather than using a third party with (specifications) that get confused by intergalactic phone calls."
Sound familiar? Substitute Samsung in a few places; mention tru2way and maybe an application or two and you've updated that press conference by 11 years.
Cablevision and Sony were so sure of success that they developed a whole product instruction booklet so consumers would know how to get the most out of their new Sony set-tops. Then, not quite three years and a mass of problems later, Cablevision quietly pushed its business to Scientific-Atlanta (now Cisco).
Like Cisco, Motorola is a new name in an old game. Over the years the duopoly has been Jerrold and S-A; General Instrument and S-A and Motorola and Cisco. Same players, different names. Also over the years, other brand names have peered through the seemingly easy-to-break glass box in which the leaders reside. Remember Sprucer? It was a great product, ahead of its time with features that were never even used. It was also the brainchild of Matsushita Electronics (aka Panasonic). Leaf through some old cable magazines and you'll see ads for RCA and Magnavox; Panasonic and Oak (an original player that almost made it into the top two). There were other names as well.
But in the end, two names always ended up on top: Those names are now Motorola and Cisco, and they're there because they know what cable operators want; know just how many consumer features to add; know how to tangle their back offices inextricably from the consumer home; know how to deliver products that work for cable operators, not necessarily consumers; and, most importantly, know how to take guff, abuse and general mockery from cable operators as they laugh all the way to the bank.
Perhaps Samsung will be the consumer electronics company that understands all of this and breaks the bonds of the cable duopoly. But remember, those who tried and failed are no slackers. If history holds, Samsung will have a splashy entrance and a quiet exit and Cisco and/or Motorola will fill the space it leaves behind.