Arris Seeking to Restore Motorola’s Market Share in Set-Tops, Gateways
Arris will return the recently acquired Motorola Home set-top box and gateway business to its former luster within the next year, regaining market share lost as the company struggled under ownership and management changes, Arris CEO Robert Stanzione told us at a recent Citigroup investor conference in New York.
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Arris bought Motorola Home from Google for $2.35 billion earlier this year, strengthening its hand with cable operators such as Comcast and Time Warner Cable as well with as AT&T and Verizon, company officials said. Motorola Home lost momentum and market share during the past few years as its parent company weighed splitting into separate set-top and wireless businesses and underwent management changes before being sold last year to Google for $12.5 billion, Stanzione said. “I think sometime next year, it will all be behind us,” he said: “Distraction within Motorola over the past several years” led to loss of momentum, “and if you think back, there was a lot of drama, including splitting the companies and CEO changes."
Several Motorola Home customers also “tightened up in terms of launching new products” after the business was sold to Google, because “they didn’t think kindly of having Google as a strategic supplier of very important technology to them,” Stanzione said. Google recognized the changes in customer orders, and “that being behind us and the distractions having been eliminated, will give us a good runway to the future,” Stanzione said. The Motorola business contributed $586 million in revenue from the close of Arris acquisition in April through June 30, Arris has said.
While Motorola’s unit sales of traditional set-tops declined 8-10 percent in Q2, under Arris management, the business focus will shift more to gateways, edge routers and IPTV devices, Arris officials said. Motorola has about a half dozen new products in the pipeline that will launch in Q4 and first half 2014, Arris officials said. Arris is among the suppliers for Comcast’s XG1 QAM/IP hybrid gateway that runs the Comcast Reference Design Kit, pre-integrated software running the cable operator’s gateways and client devices. Comcast has deployed the XG1 in four-five markets, but Arris isn’t among those yet supplying product, Stanzione said. Arris has secured design wins with three others unnamed operators that will start generating revenue late this year, Stanzione said.
"There are a number of things that are great products that are under way and it takes time to get these things launched,” Stanzione said. “When you are putting a device into a huge network like AT&T, Time Warner or Verizon, they are very careful about how it is done and there are months of testing. These are committed programs, and that is why I am optimistic."
Comcast bought “significant volumes” of Arris E6000 edge router in Q2 and deployments and trials are underway with other operators, Stanzione has said. The E6000 is starting off as a superdense cable modem termination system, but will later be equipped to become a Converged Cable Access Platform that adds edge QAM, Arris officials have said.
"There is an E6000 event occurring in every region of the world whether its trials in the field or real customer traffic,” said Bob Puccini, vice president-investor relations.
Arris also is consolidating offices as a result of the Motorola Home acquisition, including those in Framingham, Marlboro and Westborough, Mass. It also is moving an research and development facility in State College, Pa., which Arris acquired in buying C-Cor in 2007, to Motorola Solution’s headquarters in Horsham, Pa., where it has 1,000 employees, Arris officials said. Motorola Home’s employees at Motorola Mobility’s Libertyville, Ill., offices are moving to an Arris facility in Lisle, Ill., Stanzione said.