Harmonic said that a pivot among customers including Comcast to its software-based CCAP product is the main driver for a 12 percent year-over-year drop in cable edge revenue in the third quarter.
Harmonic said that demand for its virtualized Converged Cable Access Platform solution, CableOS, has been “overwhelming” since it was introduced at the SCTE’s Cable-Tec Expo conference in late September. Comcast, for example, recently signed a warrant agreement with Harmonic, based in large part on CableOS sales.
The virtualized CCAP product is set to become available in the fourth quarter.
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“It is increasingly clear the market is hungry for more flexible, scalable, and economical solutions to the challenge of exploding IP data and video services, and is therefore ready for a software based CCAP solution,” Harmonic CEO Patrick Harshman told investors Wednesday during Harmonic’s third-quarter earnings call.
However, the switch to the virtualized product disrupted sales of Harmonic’s physical cable edge equipment.
“Customer focus pivoted faster than we anticipated to our soon-to-be-released CableOS software-based CCAP and consequently demand for our legacy cable edge products softened significantly during the quarter,” Harshman said.
“Global demand for legacy edge QAM has softened as our customers evaluate and make plans for their respective transitions to CableOS and the IP video services CableOS enables,” he added. “The decline in legacy product demand was steeper than we anticipated in the third quarter. And implies that our cable edge business will continue to weigh on our combined company financial results for the next couple of quarters or so, as CableOS gets to scale.”
Harmonic’s main competitors, which include Arris, Cisco Systems, Casa Systems and Huawei, have also introduced virtualized CCAP products, or are in the process of doing so.
Overall, Harmonic posted third-quarter revenue of $102 million, up; 22 percent year over year but missing Wall Street’s consensus forecast.