In the 3C (Communication, Consumer and Car Electronic) section of CompuTrade International 284 and 285 issues, we are going to explore the development and market of the devices and terminals that related to digital home applications.  Digital home is a comparatively new concept in the market, no company or market analyst can offer a complete and standard definition for 'digital home'.  After talking to several leading companies in this field, we decided to focus on the hot items that have higher shipment volume, including cable/IP STB (Set-Top-Box)/TV, VoIP gateway/router/phone, media center, both wire-line and wireless.  However, the report is not limited to these several items, it also covers home networking applications and emerging developments of digital home applications. 

Increasing Demand of Cable/IP STB

According to statistics of the ITIS project (a project initiated by Taiwan's Ministry of Economic Affairs and conducted by Taipei-based MIC), shipment volume of the Taiwanese cable STB reaches 9,495,000 in 2008, a 34.32 YoY growth from 2007; while shipment value reaches US$ 591 million, a 20.6% YoY growth from previous year.  With the increasing demand for HD and PVR models in the European and North American markets, shipments of these two product types have seen significant growth. As a result, ASP (Average Selling Price) of the Taiwanese industry reached US$65.7 in Q3 2008, up 2.2% sequentially.

According to Chien-Hsun Lee , industry analyst at MIC, " the conversion to digital TV and replacement demand in Q3 in the European and North American markets remained key growth drivers for cable STB shipments. Taiwanese makers continued to receive orders from major brand-name vendors including Motorola, Cisco, ADB, Pace and Thomson. In addition, Panasonic and Samsung are gaining market share in the US, which also benefits Taiwanese makers' shipments."  Lee also stated that STB products contract manufactured by Taiwanese makers are shifting to high-end STB models with HD or PVR features.

On the other hand, due to the rapid development and popularity of broadband network, IPTV also developed rapidly in recent years.  As a result, the shipment value of the Taiwanese IP STB exceeded cable STB in 2008, and achieves a much higher YoY growth rate in both shipment value and volume.  The shipment value of the Taiwanese IP STB reaches US$ 612 million in 2008, a 49.6% YoY growth from 2007; while the shipment volume reaches 6,204,000 in 2008, a 92.9% YoY growth from previous year.

It is worth noticing that the ASP of IP STB is much higher than cable STB, while the former is around US$ 63 and latter is close to US$ 100 ( annual ASP in 2008).

Due to the effort and promotion of IPTV service providers in around the world, though IPTV has been commercialized for only around 10years, triple play service that integrated video, data and voice is now available and very popular, especially in European countries.

From the product development viewpoints, due to the promotion of IPTV value-added service, the demand of STB that equipped DVR and HDTV features also increase.  From the viewpoint of DVR feature, since the cost of hardware is not very high, and the integration with IP STB hardware is rather easy; as for IP STB itself, the R&D focus will be on software, try to attract users with variety and easy operated electronic menu content, and assist service providers to promote value-added service.  At present, storage-enabled IP STB is already available in the market, and is heading forward the development of multifunction STB featuring storage, recording and playing in the future.  Overall speaking, integrated IP STB will become the mainstream product of the IPTV market.  It is also predicted that IP STB will be developed as the home media/entertainment center or home gateway. 

While the market demand of IP STB is increasing, famous international brands are outsourcing their IP STB products and placing orders on Taiwanese vendors gradually, including Hon Hai, ASUSTeK, TaTung, Gemtek, Wistron NeWeb, Alpha Networks, Comtrend, ZyXel and Zinwell.  CTI have in-depth interview with Wistron NeWeb and Gemtek to explore their IP STB products in this issue, and will explore the products of other related vendors in CTI 285.

Integrating Ability

Gemtek and Wistron NeWeb (WNC) are well-known OEM/ODM companies for networking and communication products in Taiwan.  WNC has six product lines at present, according to Molly Lin, Senior Director of IR and Marketing Center at WNC, it can divided into two categories: Satellite (Direct Broadcast Satellite BU and Automotive & Digital Media BU) and Mobile (Digital Home BU, Mobile Communication BU, Networking BU and Antenna BU). The former shares around 55~60% of the company's revenue while the latter shares the reminding 40~45%.

Lin stresses on the importance of integration ability while developing the IP STB products, however, user-friendly is also very important, it is an essential condition for consumer to install the device easily.   

During the upcoming 2009 International Consumer Electronics Show (CES), WNC will showcase its IP STB for digital home and Home Wi-Fi communication Tablet.  WNC IP Set-Top Box ”VJ4600 and J7600- are developed to meet the needs of the increasing operators and service providers getting involved with the construction of IPTV systems.

The broadband networking with wide bandwidth and digitized content provides users with diverse and integrated entertainment applications and communication services. Along with increasing acceptance of digital TV and new consumer technologies, the worldwide IPTV market is growing at a rapid speed. However, currently no technology has been developed as the standard for constructing IPTV service. Each operator and service provider adopts different head-end equipment and technologies based on their on-hand equipment, costs and what service they plan to provide.

Lin Says, 'to cope with differences among standards and technologies, WNC develops and introduces IP STB solutions to fulfill various IPTV service requirements and provide IPTV operators with full high quality customized services from designing to manufacturing.'

WNC is devoted to strengthening its technical capabilities, and providing IP STB solutions for different operating systems, codecs and hardware specifications to match up with various services, applications and technologies within the IPTV market. The strong partnership with other technical vendors also provides customers with multiple choices and integrated service. 

According to Lin, for expansion of operating system options, WNC provides the price-competitive Linux platform and the fully-developed WinCE platform to help customers quickly and cost-effectively promote their services. In consideration of the fact that HDTV has been well introduced by pay TV platform operators, WNC also makes great efforts to develop products that support the H.264/VC-1 encoding format and HDMI output to fulfill HDTV requirements. The capability of embedding hard disk drives also enables DVR and push-VoD functions to fulfill diverse service requirements of end-users. Of primary importance are the user interface and the human-machine interface effort, a key matter for designing all WNC IP STB products.       

Software Development

Apart from integration ability, IP STB makers also believe software is a key issue for the development of IP STB product. Kevin Yang, Exec. Board of Director & Technical Consultant of President Office at Gemtek Technology indicates that the development of hardware devices is unlimited, however, appropriate software is needed to support these devices. 

There are three product lines available at Gemtek at present.  Including module line, retail Wi-Fi line, and telecom enterprise line.  Gemtek's IP STB and VoIP products are included in the Telecom & Enterprise line, and this product line shares around 30% of Gemtek's revenue in 2008, and is expected to enhance to 49% in 2009.  Yang states that there are more and more telecom services generated from the Internet platform.  Since the entry barrier is comparatively low, it enables networking & communication equipment makers to upgrade to telecom equipment vendors.

Gemtek's WMTD-116G IP STB allows IPTV operators to deliver superb picture performance over lower bandwidth use of the approved MPEG-4 AVC/H.264 standard. With its advanced design, quality hardware and flexible software architecture this product allows operators to offer their chosen service package over IP networks with a further improvement in the service package and with lower operating and capital costs.

The WMTD-116G is an enhanced IP-based MPEG-2 and MPEG-4 AVC/H.264 set-top box. It offers MPEG-1/2 MP@ML up to 10Mbps and hardware based MPEG-4 MP@ML decodes up to L3.  The device is an entry level IPTV STB designed for decoding of MPEG-2 and MPEG-4 digital video over broadband IP networks. Planned to meet the requirements of telecom and other broadband service provides delivering a range of advanced and compelling broadcast, on-demand and interactive TV services, WMTD-116G is a proven and high performance platform capable of supporting a variety of leading middleware, video servers, encoders and contact protection solutions.

Targeted at the highly competitive entry level market, the WMTD-116G uses dual processors design, it with the addition of a second processor for hardware decode of MPEG-4 transport streams.

Overlook of 2009

MIC report predicts that the shipment volume of cable STB may reach 12,500,000 units in 2009, a 31.6% growth from 2008, and IP STB may reach 11,340,000 units in 2009, a 82.8% growth from previous years.  As for shipment value, it is predicted that the shipment value of cable STB may reach US$ 725 million, while IP STB is expected to reach US$ 994 million.

Lin at WNC believes the market of IP STB will have better performance in 2009, and WNC also plans to introduce new products in Q2 2009, which is a STB that enables both IP and satellite connectivity features.