Analyst: Don’t write set-top-box obituary yet

Despite the recent embrace among industry giants of a technology that could obviate set-top boxes, one telecom analyst is skeptical that STBs will go extinct any time soon.

“We wouldn't get too carried away,” said Mark Sue, an analyst with RBC Capital Markets, in a research note today. “We've heard about the death of the set-top box before.”

This week Sony Electronics joined six major cable operators in pursuit of a two-way technology called tru2way that some say could eliminate the need for discrete STBs in consumer homes by embedding the functions of an STB into television sets. But Sue said the technology’s future is too blurry at this point, and plenty of potential hurdles lie ahead.

“With the different pace of technology development between LCD TV technology and residential termination devices, we're not convinced the integrated approach will prove ideal,” Sue wrote. “Generally, most consumers will upgrade their set-tops every 3 to 4 years, while TVs are generally in place several years longer. Consider the numerous challenges with the CableCARD in recent history, and our view is that advanced set-top-box units will continue to be deployed in the foreseeable future.”

Consumers may not be willing to pay extra for a TV set with the functions of a set-top embedded within, especially if it’s incompatible with telco offerings and therefore locks them in to one provider.

“It's too early to gauge the potential success or potential shortfalls of tru2way,” Sue wrote. “There are clearly some benefits outside of pure integration, with the notable one being the limited truck rolls required for deployments. But then there's the lack of control, the limited use of the cable MSO [user interface] and future-proofing that may hamper the widespread acceptance. With that in mind and the timing uncertain, we're not calling for the death of the set-top box anytime soon.”