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Motorola Mobility Announces Second-Quarter Financial Results

Motorola Mobility reported net revenues of $3.3 billion in the second quarter of 2011, up 28 percent from the second quarter of 2010. Mobile Devices net revenues in the second quarter were $2.4 billion, up 41 percent compared with the year-ago quarter. In Home news, net revenues in the second quarter were $907 million, up 2 percent compared with the year-ago quarter. Motorola Mobility maintained its leadership in key markets with set-top shipments up more than 10 percent as compared to the year-ago quarter.

Home highlights:

· Introduced Motorola Televation™, a broadband video device enabling consumers to watch live TV on a connected IP device anywhere around the home.

· Launched the Medios Xperience platform which enables operators to merge video content with social networking, games and web-based content, and deliver more interactive functionality with broadcast television and video-on-demand services.

· Selected by Time Warner Cable to develop a video gateway platform capable of delivering an advanced in-home entertainment experience and announced the DCX3600M, Motorola’s first video gateway device.

· Selected by ESPN to transition all programming for ESPN and ESPN-2 networks to an MPEG-4 HD format using Motorola’s video distribution solution.

More information on earnings can be found here.

On Motorola’s Top-Rated IPTV Integration Services

For anyone following Motorola over time, the breadth of the company’s expertise in TV delivery is both obvious and extraordinary. I don’t mean that to be a hyperbolic statement; I just mean that if you look across the tier-1 television providers in North America and globally, Motorola’s presence is immense. And one of the things that level of expertise buys you is the ability to integrate systems and services across a wide range of delivery platforms.

The Motorola professional services organization is often overlooked, but it plays an important role in constructing some of the largest television provider systems on the planet. Recently, Yoav Schreiber at Current Analysis evaluated Motorola’s position in service integration specifically in the IPTV sector. He rated the Motorola IPTV Professional Service Integration Package as outstanding, five out of five stars. Here are a couple of paragraph excerpts from the Current Analysis report, available to subscribers of the firm’s Digital Media Infrastructure intelligence.

IPTV Professional Service Integration Package: OUTSTANDING

Motorola has multiple Tier 1 cable operator references as proof points for its ability to serve as the lead systems integrator for digital video infrastructure networks, and Motorola’s flagship customer account on the telco side for digital video service delivery is Verizon’s FiOS network. Given the intensely competitive nature of the FiOS bidding process, and the service turn-up benchmarks set by Verizon, Motorola’s key role in the successful FiOS video service build-out is very strong validation for the company (i.e., 3.3 million FiOS TVsubscribers)…

…Motorola has prime systems integrator status for Microsoft’s Mediaroom IPTV platform, enabling it to offer benefits to service providers including accelerated time-to-market and reduced deployment risk for their IPTV services, by leveraging its deep Mediaroom deployment, back-end systems integration expertise and service provisioning capabilities.

Big Pay-TV Issues Front and Center

Three news stories are making the rounds that point to fundamental debates going on now in the pay-TV industry. These aren’t minor issues. They’re big, public, business-model-changing negotiations. First comes the latest comments from the NCTA on the FCC’s AllVid NOI. The NCTA does not want AllVid devices to force new unbundled content services on set-tops. Unbundled is code for a-la-carte, and cable, telco, and satellite providers are not at all keen on the idea. Given the major financial challenges of a-la-carte delivery, and the likelihood that disaggregation would only lead to re-aggregation somewhere else, it’s no wonder pay-TV providers don’t relish the prospect.

Second, Heavy Reading has a new report out in conjunction with the TelcoTV show with numbers that suggest US subscribers are willing to pay service providers for multi-screen access to their TV shows. This is significant because TV Everywhere efforts are still in the fledgling stages at this point, and providers are placing their bets without any real evidence yet of how they’ll make money from new multi-screen strategies.

Third and finally, there has been heavy debate this week about the potential impact of the coming Comcast/NBCU merger. The American Cable Association (ACA) proposes that the merger could raise TV subscription fees significantly over the next decade. One of the arguments is that Comcast could potentially charge rival cable providers higher retransmission fees for NBCU content. Given how charged the retransmission issue has become, the ACA has picked a very hot-button issue to challenge the merger on. Comcast refutes the ACA’s data and says the organization’s efforts should “be rejected by the FCC on both substantive and procedural grounds.” Last year Comcast made the explicit point that it would abide by program access rules, and would share programming with competitors.

Comcast refuted the report’s findings, saying it used flawed data and contradicted available data.

TelcoTV Session Preview

Tis the season for industry conferences, and next up is TelcoTV.  Motorola has several speakers queued for the annual event, including VP and GM Alan Lefkof, who will present a keynote speech on delivering converged media experiences. Expect to hear about companion devices and services for television viewing, as well as…

…how advances in network technology and service management and control, coupled with shifting consumer behaviors driven by Internet-based experiences, especially on mobile devices, present both an opportunity to serve up new compelling subscriber-driven experiences and a challenge to deliver a quality of service that drives uptake and revenues.

Motorola’s Richard Baker and Faisal Ishtiaq will also speak at next week’s show on the topics of customer care and 3D TV respectively. Note that 3D did not figure prominently in discussions at SCTE a few weeks back, but new research out of ESPN may spark further conversation in time for the TelcoTV event. ESPN ran lab tests during its 3D coverage of the World Cup and uncovered interesting data about 3D ad effectiveness. According to ESPN’s just-released report, ad recall and purchase intent increased significantly among viewers of 3D advertisements compared to their 2D counterparts. That should be enough to get the conversational ball rolling at TelcoTV.

Diagnose Your Home Network… from an iPad

Motorola introduced the EDGE Home Center for home network management today at SCTE. It’s a cloud-based software tool for diagnosing and tinkering with the gadgets on your broadband network, and it’s designed for consumers to access anywhere. The photo above shows the Home Center portal on an iPad.

We’ve known for a long time that the MSOs are looking for ways to give subscribers more visibility into their network connections and the devices attached to them. That’s not altruism on the operators’ part. Consumers are demanding it, for one thing, and for another, the service providers want to minimize their customer support load wherever possible. If a subscriber can diagnose a problem or provision his own equipment before even picking up the phone to call a CSR, so much the better.

The Home Center is an extension of Motorola’s EDGE platform, and builds on a whole host of other Motorola diagnostic tools – STDC for set-tops, the Timbuktu technology for remote PC access, a speed test solution (in use by Cablevision today), and many, many more. As we move into the era of gateway devices with embedded DOCSIS 3.0, these types of management tools become increasingly useful. Suddenly everything hangs off one network connection point – set-tops included.

From today’s press release:

The EDGETM Home Center is a cloud-based, multi-screen, self-help console that now enables consumers to set up and manage their home network equipment and services. With expanded visibility, flexibility and control capabilities, the EDGE Home Center helps subscribers answer support questions and resolve problems on their own, minimizing burden on service provider call centers…

An intelligent business-rules engine with automated scripts and fast service adaptation capabilities has been built into EDGE Home Center to meet the emerging support needs of the digital home. The solution’s modular framework supports the introduction of optional value-add services such as anti-virus, PC backup, home automation or third-party applications.

Verizon and Motorola Go 1 Gbps to the Home

Verizon threw down the gauntlet today with the announcement that it has trialed speeds of close to 1 Gbps using existing FiOS GPON equipment from Motorola. In other words, Verizon is showing it can hit the Gigabit mark without even migrating to new 10GPON technologies. “The trial, conducted at an existing FiOS business customer location, was intended to demonstrate in a live network setting that currently deployed FiOS equipment can support higher bandwidth services and can deliver 1 Gbps without major change to the network.”

This is what Verizon means when it says it’s got headroom it its fiber-to-the-home network. Based on the trial results, Verizon can increase FiOS Internet speed tiers significantly without sacrificing the quality of its other services. Think there’s no need for 1-Gbps speeds? Think about the coming wave of 3D TV, virtualization and cloud-based applications, and wireless backhaul.

As for Motorola’s role in Verizon’s speed tests, the two companies have worked together for a long time on the FiOS FTTH infrastructure. And Motorola has a wide product portfolio of optical networking solutions. Separate from Verizon, Motorola has also worked with a number of smaller operators on FTTH solutions as well. Need fiber with an RF return path? No problem. How about ONTs for MDUs? Piece of cake.

US/Europe Gaining Telco TV Revenue Share

Telco TV has limited availability in the US today. Verizon and AT&T have passed significant milestones in a short period of time, but even with rapid growth, there are still plenty of areas without access either to FiOS or U-verse services. (My neighborhood included) Which is why I find it interesting that telco TV revenues are predicted to shift more heavily in the direction of both North America and Europe over the next four years. According to a June MRG report, by 2014, North America and Europe together will generate a larger share of global telco TV revenue than the larger Asian markets, partly because of subscriber additions, and partly because of higher ARPUs in the western world.

Meanwhile, SNL Kagan has positive things to say about cable’s financial future. Despite increased competition, the research firm says that cash-flow margins are still healthy for the industry. Again, credit high-margin services, though cable’s getting more profit from its high-speed data and voice offerings than it is from traditional TV subscriptions.