Jan. 5 (Bloomberg) -- Cisco Systems Inc., the world’s largest maker of networking equipment, introduced a system called Videoscape that aims to tie together television from broadcast, cable and Internet companies.
The idea is to help service providers deliver any kind of media, including social-networking content, to any kind of device, Cisco said today during a presentation at the Consumer Electronics Show in Las Vegas.
“Tying this together is really key,” Chief Executive Officer John Chambers said at the event. “We have an opportunity, along with service providers and our partners, to reinvent the entire TV experience.”
As services offered by Comcast Corp.’s Xfinity, Hulu LLC and Netflix Inc. blur the lines of the television industry, Cisco is trying to capitalize by simplifying the market. The company also benefits from surging use of Internet video, since that boosts demand for routers and switches, which direct the flow of Internet traffic. By 2014, Cisco has predicted, 90 percent of consumer Internet traffic will be video.
Cisco’s foray comes as Verizon Wireless expands its fourth-generation network that can better handle high-definition video, and as the pay TV industry, including Comcast, Time Warner Cable Inc., Cablevision Systems Corp. and Charter Communications Inc., suffered its first-ever subscriber loss in the second and third quarters of 2010, according to investment firm Sanford C. Bernstein & Co.
‘Long Way to Go’
“There’s overwhelming evidence that consumers want a la carte and on-demand streaming of every kind of content,” Ryan McIntyre, managing director of venture capital firm Foundry Group and former director at Sling Media, now part of EchoStar Corp., said today in an interview. “But there’s still a long way to go before you can sit down in front of your TV or computer and have access to the entire universe of content in one place.”
After losing market share last quarter in set-top boxes -- devices that translate a cable or satellite signal into a TV program -- Chambers told investors at a December conference that the boxes will eventually be replaced by software that accesses video residing remotely in computer servers, known as the “cloud.”
Regardless of the box’s future and the companies that choose to sell it, Cisco stands to benefit from consumer demand for consistent video quality no matter the source or the device on which it will be viewed, said Patrick Henry, CEO of Entropic Communications Inc., which makes chips for Cisco and Motorola Inc. set-top boxes.
“You’re still going to need a robust network to deliver this content from broadband to the device,” he said. “The vision Cisco has put out there is they still can be a very large player, not only in the infrastructure, but also in the software that glues everything together.”
Cisco is wading into a crowded field. Apple Inc. and Google Inc. have introduced Internet-connected boxes that let consumers watch a wide variety of online content on their TVs. Intel Corp., the world’s largest semiconductor maker, said it’s built security into a new chip design that will allow Warner Bros. and other studios to stream high-definition movies over the Internet to personal computers.
“The big, gating factor is whether the content providers can keep the lid on all their content,” said Rory Altman of Boston-based consulting firm Altman Vilandrie & Co. “We predict that the lid will never be sealed. Content will continue to leak out into the free, ad-supported, over-the-top environment for a variety of reasons, making it more and more compelling for the next household to abandon pay TV.”
Cisco, based in San Jose, California, climbed 25 cents, or 1.2 percent, to $20.77 today in Nasdaq Stock Market trading. The shares dropped 15 percent last year.
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