Motorola Is Said to be Considering an Exit from the Quickly Evolving Set-top Box Business

At a time when set-top boxes are reaching beyond their traditional role as the final gatekeeper for premium channels on cable-television systems, Motorola is reported by The Wall Street Journal to be looking for an exit from the business. According to The Journal's report, the sale would not be about problems in the set-top box business, which is profitable despite a 25% decline in sales to cable, satellite and other video delivery services. Rather, it would use the proceeds of the sale — about $4.5 billion, according to the newspaper – to support turnaround efforts in its mobile phone and enterprise mobility businesses. The latter sells bar-code scanners, two-way radios and other products to business and government customers.

All three businesses are in the midst of rapid technological change, but the set-top box may be at a true crossroads. It could be an integral part of efforts to seamlesslyconnect television to the Internet, or it could be bypassed altogether. Already there are dozens of products that will move video from the Internet to television sets. But the set-top boxes' advantage has been that only they can deliver the hundreds of channels provided by cable, fiber-optic and satellite systems such as those owned by Comcast, Verizon and Dish Network.

This past summer, however, Comcast and Time Warner announced a new initiative that would let their subscribers access most of their channels  via the Internet. That "TV Everywhere" concept was touted as a way for cable customers to access their programs via their laptops. But it also demonstrates that a great variety of programming can be delivered by the 'Net — with or without a set-top box.

Wharton marketing professor Eric T. Bradlow notes that all of the functions of a set-top box can be handled by a personal computer. "Will set-top boxes be needed? Will cable television be the main way in which media is consumed?" A big part of the equation, he adds, is not just the delivery of programs, but the ability to measure who is watching what, which is of tremendous value to advertisers and marketers who want to reach targeted audiences. Both technologies can deleiver that data.

More from Knowledge at Wharton

Will Technology Firms Bridge the Chasm Between Computer and TV?

Cable TV Follows Its Subscribers to the Internet

Comcast and NBC Universal: The Rise of a Content King?