ARRIS chief betting on new product to spur sales

Every now and then I come across a local company with $1 billion in revenue — still real money these days — that virtually nobody knows anything about. That includes me.

Bob Stanzione

Bob Stanzione

In this case, it’s even more egregious because many homes are equipped with the Suwanee company’s broadband technology. Many more are likely to be in the future.

I’m talking about ARRIS Group, which supplies telecom equipment to cable companies around the world, including the voice and data modems near your computer.

I sat down with Bob Stanzione, CEO of the 1,900-employee company, to discuss how he intends to improve revenue, earnings and stock performance, which have lagged lately. (One example — 2010 profit declined 30 percent.) I also wanted to know what’s in store for the home of the future.

It turns out, they’re related issues — and the future is now.

“Top-line growth has stagnated for two years,” Stanzione said. That’s partly because the fall in new-home construction constrains cable sales, which directly affects orders for ARRIS equipment. At the same time, however, consumers’ appetite for easily accessed high-speed data in the home keeps growing, he said.

Enter a new product the company is rolling out to cable companies after two years of R&D. Called “whole home solution,” it essentially ties together Internet, voice and video — including a consumer’s personal music, film and game collections — into an integrated system operated by remote control. No new wiring is required. One box, called the “media gateway,” functions as an Internet modem, router, telephone modem and DVR.

The “set-top box on steroids,” as Stanzione called it, removes technical clutter in the house. Its features include allowing consumers to pause a TV in one room and pick up the action in another, or record as many as six TV programs simultaneously. (I think media junkies call that heaven.)

ARRIS just started to market the new system to cable operators, and has not yet secured a deal with local providers, which offer some but not all of the features of the company’s product. Stanzione estimates the price to U.S. consumers, which is not set by ARRIS but by the cable firms, will cost an extra $20 or so per month, depending on the operator.

“It opens up a whole new segment of the addressable market,” Stanzione, 63, said. “We’ll be back on a growth path in the second half of the year.”

But the competition for cable company dollars — which include rivals like Cisco and Motorola — is not standing still.

“The competitors are tough. They’re very good and have a lot of depth,” Stanzione said. “We’ll win some and lose some around the world.”

Outside of the cable firms, the competition includes telephone and satellite companies. Interestingly, that type of competition can boost ARRIS sales.

“It causes cable operators to have to invest in improving the customer experience and networks,” Stanzione said.

Is he going to stick with selling exclusively to cable providers or come up with new products for telephone companies, too?

“For the most part, we’re like Ivory soap — 99 percent pure,” Stanzione said. “We’re placing a big bet on the cable operators, and not hedging.”

- Henry Unger, The Biz Beat

For instant updates, follow me on Twitter.

2 comments Add your comment

Cletus

June 7th, 2011
1:59 pm

I absolutely detested my ARRIS box from Comcast. The phone service never worked and if you wanted to reset the thing you had to remember to remove the batteries. Awful!

BJOHNDAWG

June 7th, 2011
3:31 pm

I think cable companies will have a hard time getting customers to pay an additional $20 a month to manage their music, video, and internet. Also why a box, why not the cloud as the technology instead of a hardware solution?