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Modem Shipments Eclipse Old Record

Alan Breznick, Senior Analyst

Combined worldwide shipments of cable data and voice modems surged well past the 16 million unit mark during the first half of the year, easily setting a new record for the cable industry.

According to the latest compilation of figures by Heavy Reading, cable equipment makers shipped nearly 16.4 million Docsis cable modems, embedded multimedia terminal adapters (E-MTAs), and integrated gateways over the first six months of 2007. That represents a 19.5 percent jump from the 13.7 million total Docsis devices that cable tech vendors shipped during the corresponding period of 2006.

E-MTAs, which integrate cable data modems with PacketCable IP phone adapters, led the way again in the first two quarters, thanks to steadily rising demand for the combined voice/data devices. As cable operators in the U.S., Canada, and the rest of the world ramped up their rollouts of VOIP service, global voice modem shipments rose to more than 7.4 million units, up 38.9 percent from nearly 5.4 million units in the first half of 2006.

Due to such robust growth, E-MTAs accounted for an impressive 45.4 percent of all Docsis device shipments by the leading cable tech vendors in the first two quarters. That's up from a 39.1 percent share for the same period a year earlier.

Worldwide shipments of data-only cable modems also climbed a bit over the first two quarters of the year, albeit much more modestly than E-MTA shipments. Cable equipment makers shipped close to 8.6 million data modems in the first six months of 2007, up just 2.5 percent from more than 8.3 million modems in the first half of last year.

Arris Group Inc. (Nasdaq: ARRS), which took over first place in the rapidly growing E-MTA category in 2005, widened its edge over previous category leader Motorola Inc. (NYSE: MOT) even as both companies boosted their shipment numbers sharply. Arris reported shipping nearly 3.5 million voice modems in the first half of the year, up from more than 2.1 million in the first two quarters of 2006. As a result, the firm captured 46.5 percent of the E-MTA market, up from 40.1 percent the year before.

Motorola fell further behind Arris in the worldwide E-MTA rankings, even though it also boosted its unit shipments markedly. Moto shipped 2.0 million voice modems in the first half of the year, up from nearly 1.6 million units in the first half of 2006. But, due to Arris's strong growth, Moto's market share actually slipped to 27.0 percent, down from 29.2 percent last year.

Third-place Scientific Atlanta experienced a weaker first half in E-MTA sales, causing it to lose more ground to both Arris and Motorola. SA shipped more than 1.0 million voice modems in 2007, down from more than 1.1 million units in 2006. Consequently, its market share plummeted to 14.0 percent, down from 20.8 percent the year before.

Table 1: Top E-MTA Suppliers in 1H07

Vendor E-MTAs Market Share
Arris 3,456,745 46.5%
Motorola 2,005,000 27.0%
Scientific Atlanta 1,042,480 14.0%
Thomson 494,212 6.7%
Ambit 213,299 2.9%
Other 220,000 3.0%
Total 7,431,736 100.0%
Source: Company reports, Heavy Reading estimates

Although E-MTAs generated most of the market's overall growth, data-only modems still accounted for slightly more than half of the Docsis devices shipped during the first six months of the year. The nearly 8.6 million cable modems made up 52.3 percent of the total Docsis gear market, down markedly from 60.9 percent a year earlier.

Motorola continued to dominate the traditional cable modem market, maintaining a wide lead over its closest pursuers. Moto reported shipping nearly 3.3 million cable modems globally in the first half, commanding a 38.0 percent market share, down from 43.7 percent a year earlier.

As Motorola's biggest rival, Scientific Atlanta gained some ground on the leader but remained a distant second in the cable modem rankings. SA shipped nearly 1.8 million modems in the first two quarters, earning itself a 20.5 percent share, up from 15.7 percent a year earlier.

Ambit Broadband came in a strong third in the rankings as it also closed the gap a bit with Motorola. Ambit shipped almost 1.4 million data modems over the first six months, carving out a 16.0 percent share, up from 13.6 percent in 2006.

Table 2: Top Cable Modem Suppliers in 1H07

Vendor Cable Modems Market Share
Motorola 3,254,000 38.0%
Scientific Atlanta 1,758,435 20.5%
Ambit 1,368,818 16.0%
Thomson 830,263 9.7%
Arris 267,424 3.1%
Other 1,080,000 12.6%
Total 8,558,940 100.0%
Source: Company reports, Heavy Reading estimates

Adding up both data-only modems and E-MTAs, Motorola maintained its dominance over the first half of the year. But Arris scooted past Scientific Atlanta for second place in the overall Docsis device rankings.

Hitting a new high, Motorola shipped more than 5.5 million data and voice modems in the first half, up from 5.2 million in 2006. As a result, Moto captured 33.9 percent of the market, still well ahead of its rivals although down from its 38.0 percent share a year earlier.

Arris, making the most of its soaring E-MTA sales, posted its strongest overall showing yet in the first half. Arris shipped a total of 3.7 million Docsis devices, up from 2.3 million units the year before. Thus, its overall market share rose to 22.8 percent, up from 17.1 percent in 2006.

Despite a healthy hike in total units shipped, Scientific Atlanta slumped back to third place in the overall Docsis device rankings after wresting away second place from Arris last year. SA shipped nearly 2.9 million data and voice modems in the first half, up sharply from 2.4 million units in 2006. But its worldwide market share stayed even at 17.7 percent because of the rival gains by Motorola and, especially, Arris.

Table 3: Total Docsis Device Shipments in 1H07

Vendor Docsis Devices Market Share
Motorola 5,545,000 33.9%
Arris 3,724,169 22.8%
Scientific Atlanta 2,891,719 17.7%
Ambit 1,582,117 9.7%
Thomson 1,324,475 8.1%
Other 1,300,000 7.9%
Total 16,145,363 100.0%
Source: Company reports, Heavy Reading estimates

Alan Breznick, Senior Analyst, Heavy Reading

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