The cable access technology business’s new, virtualized era has arrived for vendor Harmonic, which reported a 78% year-over-year spike in its fourth-quarter cable access revenue, to $43 million, driven by its CableOS software product.
San Jose-based Harmonic also touted two new but unspecified Tier 1 cable operator clients for CableOS, which converts the formerly hardware-intensive converged cable access platform (CCAP) of the typical cable hybrid fiber coaxial network into a virtualized software-based architecture.
CommScope, which acquired Arris last year, Cisco Systems and Casa Systems, respectively, led the old paradigm of supplying CCAP and cable modem termination system (CMTS) hardware. In a worldwide cable broadband business quickly migrating to virtualized schemes, look for these vendors to talk about their own virtualized cable access products on their fourth-quarter earnings calls.
Research company Dell’Oro Group, which closely tracks the cable access technology business, also said last week that revenue from virtual CMTS revenue will grow from $90 million last year to $418 million in 2024.
But overall, that migration from hardware to software won’t be great for business long-term. Dell’Oro also predicted that global cable access revenue will decline 5% over the same five-year span.
“Global operators continue to invest in their broadband access networks, but are increasingly delivering more capacity with lower-cost, virtualized hardware,” Dell’Oro Group senior research director Jeff Heynen said. “Virtualization, coupled with subscriber saturation in some mature markets will result in gradually declining revenue for broadband access equipment globally.”
Certainly, Harmonic, which suddenly finds itself in a position of market leadership, isn’t sweating that long-term projection.
The company now boasts five Tier 1 clients for CableOS, including Comcast, which signed a $175 million multiyear deal to use the product last summer.
Harmonic said it now has 23 CableOS clients in commercial deployment. Revenue for the product was up 78.3 in the fourth quarter. Overall revenue for Harmonic was up 7.6% to $122.2 million during the period.
“This is a market category that Harmonic largely invented that we’re leading today and that we’re well-positioned to lead going forward,” Harmonic president and CEO Patrick Harshman told investors Feb. 3 on his company’s fourth-quarter earnings call.
CommScope and the rest of Harmonic’s competitors certainly take heart in that, despite the early sales activity for CableOS, which is quite hopeful, the virtualized cable access market remains wide open.
Harshman conceded that while CableOS’s 23 operator clients collectively serve 45 million cable modems worldwide, only about 1 million of them are attached to CableOS at this point.
“We're focused on ensuring this first wave of 23 deployed customers continue to be delighted and moving towards leveraging CableOS across their entire footprint from approximately 45 million modems,” Harshman said.
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