With the rise of TV Everywhere and services to deliver content to connected consumer electronics, many are wondering what this means to the future of the set-top box business, particularly from stalwarts such as Motorola (Google) and Cisco. A recent Forbes article touched on this topic. Is the set-top business declining precipitously? Cisco doesn’t think so – it just announced the purchase of conditional access and UI provider NDS.

Brett Sappington, our Senior Analyst, has a couple of thoughts:

The STB is not dead. I maintain:

1. That Google is selling the STB business because operators have made it clear that they do not want to be in bed with Google in the set top box arena. So, Google is faced with either selling that division and getting some value or seeing it wither away over the next 4-5 years as operators migrate away to other solutions.
2. That Cisco's acquisition of NDS should help put to bed some of the sale rumors around the sale of Cisco's STB business. Why would Cisco spend $6B on a company that specializes in STB software if they wanted out of the STB business?

And my thoughts?

Cisco’s aiming at managing and delivering content to both the “new world” of connected CE and the traditional world of set-top boxes. The 2010 purchase of ExtendMedia I view as “new world” (TV Everywhere, connected CE), whereas NDS I view as “old world” (security, user interfaces, etc.). Both assets, however, are integrated with Videoscape and Cisco’s Content Delivery System to pave the way for multiple devices receiving content with consistent user interface experiences.