3/2/2004 -- Don't look now, but a new report from UK market research house Infonetics Research finds that perennial cable modem termination system (CMTS) market leader Cisco Systems Inc. has been dethroned -- at long last -- by cable industry specialty vendor Arris Int'l Inc. CMTS describes a cable head end device that lets cable multiservice operators (MSO) offer broadband Internet connectivity to customers.

Arris bested Cisco in the North American CMTS market, Infonetics says, but the networking giant nevertheless retained its market share crown in the Europe/Middle East/Africa (EMEA), Carribbean/Latin America (CALA), and Asia Pacific regions.

For the record, Infonetics says that the vast majority – 64 percent – of CMTS revenues are derived from North America, with 18 percent generated in Asia Pacific, 14 percent in EMEA, and just 4 percent in CALA.

Moreover, Infonetics points out, Cisco remained the overall 2003 CMTS revenue champ – albeit by only one percentage point. The research firm notes that Arris has demonstrated solid growth over the last 12 months, especially.

For the fourth quarter, Infonetics found that CMTS-related revenues jumped by 13 percent over Q3 2003, while port shipments were up 31 percent. Also between Q3 and Q4, worldwide cable customer premises equipment (CPE) units increased to nearly 4.3, while revenues increased to $316 million. Motorola was the CPE market leader, followed by Ambit, Terayon, Thomson, Toshiba, and Scientific Atlanta.
Elsewhere, Infonetics found that worldwide CMTS revenue was flat between 2002 and 2003, even though ports were up 5 percent. This is indicative of steady price declines, researchers say. Over the next few years, said Infonetics principal analyst Michael Howard in a statement, CMTS revenues should grow slightly.

“CMTS revenue will grow in the single-digit percents in 2004 and through 2007 as MSOs expand the bandwidth capacity of their networks and add voice services, led by North America and Europe,” he said.

In the CMTS space, Arris has traditionally competed against Cisco, ADC, Motorola, and Terayon, but its sales efforts received a boost last August, when it partnered with Juniper Networks Inc. to co-market its CMTS products and Juniper’s routers to MSOs.

At the time, Juniper had just disclosed plans to discontinue development on its G-Series CMTS products, preparatory to exiting the CMTS space altogether. Juniper, a manufacturer of high-end routers, became a CMTS competitor when it purchased Pacific Broadband Communications in November 2001 for $200 million. Like Cisco, the company sought to successfully market both its CMTS and IP routing products to MSOs, but officials acknowledged that these plans never quite worked out. In the end, CMTS-related sales accounted for less than 5 percent of Juniper's revenue. -Stephen Swoyer