Portfolio Assessment: Cisco IPTV/Multi-screen PortfolioReport Date: February 27, 2012

Analyst: Westfall, Ron

Service: Service Provider Infrastructure

Market: Digital Media Infrastructure

Class: IPTV/Multi-screen Solutions

Current Perspective:

Buying Criteria Ratings

Buying Criteria Ratings

Summary

Portfolio Description

Ciscos IPTV/multi-screen solution resides primarily in its Videoscape solution. The Videoscape portfolio integrates the cloud, network andclient components required to deliver high quality of service (QoS)/quality of experience (QoE) multi-screen experiences and transition theeconomics of network operations. It is built upon its medianet architecture for providing an end-to-end IP network optimized for mediaservices. Ciscos medianet provides the infrastructure for an IPTV/multi-screen solution that is cloud, network and client aware. Ciscosmedianet also provides the infrastructure for Ciscos Videoscape solution which delivers unified content experiences across multiplescreens. The cloud component addresses the evolution of the video head-end to a common data center architecture. This media platform uses Ciscodata center and video command-and-control technologies to deliver multi-screen services.Cisco Videoscape cloud components include thefollow ing:

Cisco Unified Computing System (UCS) and Cisco Nexus family designed to integrate server, storage, network and virtualizationresources into a unified Ethernet environment.Cisco Videoscape Media Suite, which provides unified content management and entitlement to manage and publish content across TV,PC, tablet and mobile device screens, including search and navigation across all content sources such as linear broadcast, VoD and user-generated content.Cisco Media Processor and Cisco Transcode Manager provide multiformat adaptive bitrate (ABR) encoding and transcoding functions todeliver live and on-demand content to any screen, in the best video quality based on the available bandwidth.Cisco Conductor for Videoscape, orchestrates the various services, devices and subscriber management functions across clients, cloudsand networks, including managed and unmanaged services, to support presence, real-time app data, resources, social networking andcommand-and-control functions.Cisco Conductor Back Office delivers quadrature amplitude modulation (QAM)-based session management, resource management,entitlement, and video service management capabilities to cable operator subscribers as well as video control plane and servicemanagement capabilities during cable operator transitions to all-IP video platforms.

The Cisco Videoscape IP Next-Generation Network (NGN) component supplies the IP transport, content distribution network (CDN) andcable solutions components. This includes embedding video intelligence w ithin network platforms to achieve network goals such asassuring a consistent subscriber experience over multiple endpoints, hitless sw itchover and inline video monitoring and total cost ofownership (TCO) benefits. Cisco Videoscape IP NGN components include the follow ing:

Cisco IP NGN Video Optimized Transport Solution, which extends transport capabilities to cloud-based media and applications. It usesCisco service provider IP routing and video back-office infrastructure portfolio, including the CRS-3 Carrier Routing System and ASR 9000Aggregation Services Routers (ASRs).Cisco Content Delivery System (CDS), which extends the CDN platform designed for personalized media delivery. This includes TV

streaming for content delivery to digital TVs and STBs and Internet streaming to deliver content and apps to connected IP devices;ingest, store and deliver live and on-demand content and apps to any device.Cisco Videoscape CDN Analytics provides reporting and analytics to enable operators to collect info from their CDN or third-party CDNdeployments and assess network performance in real-time, including traffic distribution and volume, capacity use, asset popularity,billing trends, and bandwidth consumption to improve services and support capabilities.Cisco Converged Cable Access Network, which employs a DOCSIS 3.0 access platform, including the Cable Modem Termination System(CMTS) 3G60 and CMTS DS384 line cards.

The Cisco Videoscape Clients include the follow ing:

Cisco Videoscape Multiscreen Gateways that are designed purposely for delivering IP-based video services in the home, including STBs,tablets, smartphones, and game consoles.Cisco Videoscape Media Gateways integrated linear and online video, voice, mobility, data, and routing capabilities on a centralized hubto support apps, entertainment and communications in the home network and interworking w ith cloud-based services such as lifestylemanagement apps and video streaming.Cisco Videoscape STBs combine linear and on-demand TV, DVR recordings, premium programming, and online entertainment in STB formfactors.Cisco Videoscape Soft Clients are reference software development kit (SDK) user interfaces developed to customize TV and the digitalmedia content across multiple screens. This includes providing a common interface to the operator cloud and the ability to embed theclients in CPE devices such as gateways, STBs, smartphones, gaming consoles, etc.

To ease operator adoption of Videoscape, Cisco includes Videoscape Quickstart (i.e., pre-integrated, pretested TV Everywhere solution),Videoscape Voyager Virtual (i.e., cloud-based apps delivered to legacy STBs), Cisco Voyager Vantage (i.e., web-based software platform forTV navigation and app experience platform), and Cisco Services (i.e., professional services).

Portfolio Positioning

Cisco has converted its thought leadership on video traffic growth (i.e., Visual Networking Index) and global data center and cloud-basedIP traffic growth (i.e., Cloud Index) into compelling propositions for video delivery (i.e., CDS), transport (i.e., ASR), cloud (i.e., CloudVersearchitecture) and next-generation networking (i.e., medianets). Leveraging client, network and cloud components of its Videoscapeframework, Cisco offers its service provider customers a single vendor solution that delivers cohesion and coherence for its diverse digitalmedia portfolio.

Ciscos corporate vision and strategy around medianets differentiates its video networking solutions from major rivals by effectivelyarticulating how Ciscos vast portfolio assets can best meet the overall IP networking needs of all video and rich media customers includingservice providers, content providers, enterprises and consumers. Ciscos medianets relies on three distinct areas of technology andmarketing focus, which translates into device, network and media aware sessions for optimal rich media experiences.

Ciscos medianets marketing and sales strategy emphasizes the enablement of a comprehensive video experience through the offering ofthree fundamental building blocks: (1) IPTV and RF head-ends and content delivery systems; (2) Intelligent IP Network via carrier routingplatforms such as the 7600, CRS-1, and ASR platforms; and (3) Connected Home consumer products such as set-top boxes (STBs) includingthose w ith built in digital video recorders (DVRs), broadband gateways and a w ide range of home networking systems and appliances.

Cisco submitted its CloudVerse framework for testing to the European Advanced Network Test Center (EANTC) for an independent andcomprehensive test of the framework that combines the foundational elements needed to enable organizations to build, manage andconnect public, private and hybrid clouds, including for media data center and video applications.. The Cloud Applications and Servicescomponent of CloudVerse included testing of the Videoscape platform and its capabilities in the comprehensive video transcoding, multi-format video delivery, Cisco Mediasuite, ABR scalability, live streaming redundancy, transcoder redundancy and mobile video areas. Testoutcomes included verification that a single Cisco CDS could deliver just about 40Gbit/s of HLS Video on Demand content to 12,002subscribers.

Portfolio Traction

Cisco has generated high profile w ins for elements of its Videoscape multi-screen solution, including Rogers Communications of Canada,YES of Israel recently announced at the CES 2012 show. Telstra, Ciscos first Videoscape customer, is deploying Cisco CDS technology. BTWholesale is building its online video CDN, branded Content Connect, w ith Ciscos CDS technology. Numericable in France is a key accountthat uses Cisco Videoscape as a TV platform that brings together digital TV and online video content w ith social media and communicationsapplications. AEG Digital Media has standardized on the Inlet-originated Spinnaker appliance for live internet streaming, as well as Ciscocore networking infrastructure. NET, Brazils largest cable operator, adopted the CDS solutions for its new VoD offering, KT and Telenorhave selected the MediaSuite and Media Processor products, TELUS uses Videoscape MediaSuite and Clients to extend its Optik TV servicesto mobile devices through its 'Optik on the go' offering while Spains Digital+ adopted the iPlus decoder platform to dynamically record andreproduce Digital+ content.

Ciscos partnership w ith NBC for the 2010 Winter Olympics the largest all IP video network deployed for a televised sporting event provides high level industry visibility for Ciscos medianets technologies. Cisco has also added Portugal Telecom as a service providerreference account and enlisted AT&T to adopt its w ireless IPTV solution featuring new w ireless receivers and w ireless access points(WAPs), across the entire AT&T U-verse TV footprint, demonstrating continued depth of traction w ithin key telco operator accounts.

Cisco has gained early mind share in advancing operator build-out of CDNs as well as federated CDNs. Federated CDNs are defined as amulti-footprint, open CDN built from the network resources owned and operated by independent operators, enabling operators to deliverInternet-w ide CDN services extending beyond the footprint of their own network. Cisco has already conducted pioneering trials w ith majoroperators, such as BT, KDDI, Orange, Telecom Italia, and SFR in proving the viability of CDN federations and puts the company in a solidcompetitive position to capitalize on the burgeoning federated CDN market (i.e., up to $12 billion by 2015).

Current Perspective

Ciscos Videoscape solution for multi-screen/IPTV video delivery is threatening to the solution sets of rival vendors. Thesolutions strength emanates from Ciscos possession of an integrated and end-to-end video networking solution that is explicitly linked tothe companys cloud, network and client portfolio assets which few if any rivals can match directly w ithout relying on multiple partners. Theacquisition and subsequent integration of Scientific-Atlanta, now the core of Ciscos Service Provider Video Technology Group, significantly

bolstered Ciscos multi-screen/IPTV Solution proposition via the addition of STB, video distribution and video system integration portfolioassets. Ciscos Advanced Video Services Group effectively leverages the acquired Scientific-Atlanta video expertise, evidenced by end-to-end systems integration w ins at Virgin Media in the UK, VoD launch and integration w ins at ASTER in Poland, as well as providing theservice support for over 1,000 digital HEs worldw ide, including over 300 in North America, and supporting over 10,000 uplink channelsworldw ide. Ciscos CDS video server platform is one of the few to support multiple protocols, providing a common architecture for enablingservice providers to deliver video content to the three screens, and is leading multiple CDN architecture efforts to support service providerIP video delivery requirements.However, Cisco faces challenges w ith respect to its multi-screen/IPTV solution sales efforts. For instance, Ciscos telco-based deploymentcredentials remain limited in comparison to its key service provider infrastructure rivals, such as Alcatel-Lucent, Ericsson, Huawei, andGoogle/Motorola. Cisco has terminated its ISDP middleware offering and plans to support Microsoft Mediaroom, however, CiscosMediaroom support trails the established presence and expertise of Microsoft partners Alcatel-Lucent and Google/Motorola. In addition,although Ciscos CDS platform has benefited from the incorporation of Flash technology, (i.e., improved streaming capacity from solid statedrives, and greater cache capacity w ith larger drives), the CDE 250 still trails most competitors in terms of solid state cache capacity. Thus,the jury is still out as to how extensively Cisco can emulate its historical and ongoing success in the cable, satellite, and broadcaster realmswithin the telco IPTV realm.

Solution Elements

Solution Elements

Elements

Head-end Systems/Encoders Encoder Model D9034-S; Model D9054 HDTV; DCM;Power Vu; Cisco Transcode Manager; Cisco MediaProcessor

Content Security D9854 HD AVC decoder

Content Delivery Systems Cisco CDS

IPTV Middleware N/A

STB Range and Interoperability IPN330HD; IPN430MC; IPN603MCG

Strengths/Weaknesses

Strengths

The Cisco Videoscape proposition offers an integrated and end-to-end video and content delivery solution which explicitly integratesCiscos cloud, network and client portfolio assets, which position the company as a strategic provider of digital media solutions. CiscosVideoscape extends an open, standards-based architecture to deliver content reliably from the headend to end user devices, enhancingthe overall customer experience w ith capabilities such as QoS, video admission control, error repair, improved channel-change time andenhanced multicast capabilities.

The CDS 250 model 2S6 supports 30 Gbps of MPEG and HTTP streaming for up to 8,000 SD MPEG-2 streams (at 3.75 Mbps each) per twoRU chassis, and over 176,000 streams per rack, which is one of the highest streaming density platforms on the market. W ith 8 Gbps ofingest capacity, Ciscos CDE 250 model 2S6 can ingest up to 2,000 simultaneous MPEG-2 SD streams. W ith the CDE 250s 40 Gbps of I/O,this ingest capacity does not impact full stream concurrency. Ciscos stream ingest metric leads all rival platforms by a significant order ofmagnitude.

Ciscos CDS leverages Ciscos IP Next Generation Network (NGN) architecture, which employs the companys proven advanced servicerouting intelligence to bind content delivery to IP network transport. It forms part of Ciscos medianets strategy for delivering an end-to-end rich media-aware IP infrastructure which can serve nearly 2 million emulated IP video subscribers from a single metro PoP, according toa simulated test conducted by European Advanced Network Test Center (EANTC).

By extending Videoscape to mobile Internet scenarios, w ith its MOVE framework, Cisco is applying its medianet architecture to mobilenetworks. Ciscos MOVE framework leverages its established video, routing, and w ireless networking expertise to advance its mobileInternet proposition. The Content Application Engine (CAE) incorporates video transcoding software on Ciscos UCS platforms, providing avirtualized platform to adapt content for multi-screen/mobile video service delivery. Videoscapes integrated data center-based approachdelivers a differentiated approach for scaling video transcoding by leveraging centralized and virtualized data center resources.

Ciscos Advanced Video Services Group possesses more than 55 years of experience in the media industry, and continues to capitalize onexpanding digital media/IPTV integration opportunities. Evidence of continued traction and momentum for Ciscos Advanced Video ServicesGroup includes end-to-end systems integration w ins at Virgin Media in the UK, VoD launch and integration w ins at ASTER in Poland, andsupporting Numericables 3-D consumer service launch.

Ciscos Videoscape framework leverages its proven IP NGN infrastructure and key enabling technologies based on its Content DeliverySystem (CDS), Unified Computing System (UCS), Cable Modem Termination System (CMTS), Aggregation Services Routers (ASR) and CarrierRouting System (CRS) platforms. This further positions Cisco as a strategic provider of multi-screen video solutions for enabling the deliveryof rich media content across both managed and un-managed networks, and to any IP-enabled device.

Weaknesses

Although Cisco, via its video networking assets and related IP NGN assets, possesses undeniable credibility w ithin the cable space forscaling video applications, its established traction in the IPTV space primarily centers around IP STBs and aggregation/core routinginfrastructure. IPTV solution rivals w ill continue asserting that the jury is still out as to how much further influence and significance Cisco canachieve w ithin the telco IPTV market, e.g., in terms of scaling efforts vis--vis their own established and broadly deployed IPTV/IP videosolutions.

The Videoscape architecture embodies several moving parts including cloud, network and client solution elements. Cisco Videoscape sales

and marketing efforts risk a biting off more than it can chew aspect that can dilute messaging initiatives and potentially confuse themarket on the true value of adopting its Videoscape solutions.

The availability of the Cisco Conductor platform, which is designed to integrate the video control plane and video back office elements ofthe Cisco Videoscape portfolio, does not assure Cisco can drive operator adoption of the Videoscape architecture, let alone the platformitself. While making the Cisco Conductor available is a vital first step in unifying the cloud, network and client elements of the Videoscapeportfolio in the back office, Cisco w ill face a more daunting task in driving the Conductor platform deeper into service provider networks andthe overall market.

While Cisco has benefited from the incorporation of flash technology (i.e., improved streaming capacity from solid state drives, andgreater cache capacity w ith larger drives), the CDE 250 platform still trails most competitors in terms of solid state cache capacity.Meanwhile, despite the benefits of improved processing performance and platform density, converged applications for TV and Internetstreaming from a single CDE appliance remains on the product roadmap.

Ciscos video optimization technology (i.e., MOVEs video transrating and transcoding capabilities) is still in customer testing, andtherefore unproven relative to more established products from rivals. In addition, in light of Ciscos Inlet acquisition, the incorporation ofCiscos own transcoding software in the MOVE framework highlights a potential conflict between Ciscos R&D and M&A efforts. Specifically,w ill Inlets technology supplant or complement Ciscos internal R&D efforts?

As a result of Ciscos decision to terminate its ISDP middleware offering for IPTV deployments, the company intends to transition towardssupporting the Microsoft Mediaroom platform. However, the transition to Mediaroom support trails established presence and expertise ofMicrosoft partners Alcatel-Lucent and Motorola.

Buying/Selecting Criteria

Back-Office Compatibility COMPETITIVE Benefit Cisco has incorporated its ExtendMedia acquisition into its Videoscape Media Suite back-office, which serves as the cloud-basedplatform for managing multi-screen video services. Combined w ith the Cisco Conductor, Cisco offers network and cloud-based productenhancements to fulfill multi-screen video back-office functionality as well as service and device management.

Benefit Ciscos ROSA video management platform leverages deep experience solving video management challenges such as the controland monitoring of third-party gear and the effective support of remote operations. Ciscos ROSA platform supports over 725 devices viaSNMP and proprietary protocols to ease overall back-office integration efforts as well as to demonstrate clear differentiation in the rangeof back-office compatibility options.

Benefit Ciscos Conductor QAM Back Office, an outgrowth of the Cisco/BNI acquisition, enables video control plane and servicemanagement capabilities for subscribers accessing content over any network or device, and allow operators to roll out differentiated videoservices in a potentially more rapid and profitable fashion. QAM video support w ill be the initial instantiation w ith IP video being addedduring H2 2012.

Benefit The June 2008 DiviTech acquisition bolstered Ciscos video network management platform w ith a service-oriented layer thatoffers IPTV operators and broadcasters an efficient solution that reduces the complexity in managing the ever-increasing volume of digitalcontent. The DiviTech platform synchronizes and validates metadata management, ensuring electronic program guide (EPG) accuracy, andit reduces manual intervention by automating configuration management.

Issue The availability of the Cisco Conductor platform, which is designed to integrate the video control plane and video back officeelements of the Cisco Videoscape portfolio, does not assure Cisco can drive operator adoption of the Videoscape architecture, let alonethe platform itself. While making the Cisco Conductor available is a vital first step in unifying the cloud, network and client elements of theVideoscape portfolio in the back office, Cisco w ill face a more daunting task in driving the Conductor platform deeper into service providernetworks and the overall market.

Issue Ciscos Videoscape Media Suite multi-screen content management proposition, which leverages its ExtendMedia acquisition, ispotentially vulnerable to rivals that possess the back-office platforms for managing various operational and business systems, such as forsubscriber and billing management. As a result of this portfolio gap, Cisco is potentially vulnerable to rivals that can create morecompelling end-to-end offers w ith more explicit ties between video delivery, content management and back-office solutions.

Issue Cisco has decided to terminate its ISDP middleware offering, evidence that the company has been unsuccessful in differentiatingthe platform (or generating revenue). While Cisco intends to transition to supporting the Microsoft Mediaroom platform, Ciscos end-to-endIPTV proposition suffers somewhat from the lack of its own middleware assets to control and influence subscriber personalization of videoexperiences. In addition, the transition to Mediaroom support trails the established presence and expertise of Microsoft partners Alcatel-Lucent and Motorola. Content Delivery System Scalability STRONG Benefit Ciscos family of Content Delivery Engines (CDE) are part of the companys software-based, distributed CDS, which provides acommon architecture for supporting multiple on-demand applications, such as serving video to TVs, PCs, gaming consoles and mobiledevices. The CDE 250 supports multiple protocols, including MPEG-2/4, H.264, Adobe FMS, Microsoft W indows Media, Apple QuickTime,Microsoft Smooth HD, HTTP Progressive Download, 3GPP, Adobe Dynamic HTTP Streaming, and Apple HLS Streaming. The CDE 250 model2S6 provides a common platform for both TV on demand and Internet streaming applications (though not yet from the same server).

Benefit The CDS 250 model 2S6 supports 30 Gbps of MPEG and HTTP streaming for up to 8,000 SD MPEG-2 streams (at 3.75 Mbpseach) per two RU chassis, and over 176,000 streams per rack, which is one of the highest streaming density platforms on the market.W ith 8 Gbps of ingest capacity, Ciscos CDE 250 model 2S6 can ingest up to 2,000 simultaneous MPEG-2 SD streams w ith standard IPframes (1,000 streams/RU) and 4500 MPEG-2 SD streams w ith jumbo IP frames (2,250 stream/RU).. W ith the CDE 250s 40 Gbps of I/O,this ingest capacity does not impact full stream concurrency. Ciscos stream ingest metric leads all rival platforms by a significant order of

magnitude.

Benefit The CDS leverages Ciscos IP NGN architecture, which employs the companys proven advanced service routing intelligence tobind content delivery to IP network transport. Ciscos CDS technology can also be incorporated into a blade in the ASR 9000, eliminatingthe need to deploy standalone content delivery elements, ahead of rival approaches from Alcatel-Lucent and Juniper. Cisco extends itsCDN intelligence further by incorporating caching technology into Videoscape media gateway clients.

Benefit The CDE 250 delivers a single platform to support both real-time and on demand (i.e., time shifted) media services. To reduceoverall backbone bandwidth consumption in the network, content is ingested once for persistent storage in the central library, and thendynamically propagated to regional caches and local streamers. The Segmented Cache-Fill operation of Ciscos CDE technology deliverssub 500-millisecond latency from ingest to the network edge, enabling real-time, on demand and online content to be seamlesslyintegrated into a single video experience.

Issue Although Cisco can point to several leading cable and telco customers that have deployed the CDS solution, Cisco still facesincumbents that have broader video server deployments in the cable space and first mover advantages in the telco space.

Issue While Cisco has benefited from the incorporation of flash technology (i.e., improved streaming capacity from solid state drives,and greater cache capacity w ith larger drives), the CDE 250 platform still trails most competitors in terms of solid state cache capacity.Meanwhile, despite the benefits of improved processing performance and platform density, converged applications for TV and Internetstreaming from a single CDE appliance remains on the product roadmap.

Issue Ciscos Videoscape proposition would benefit from the diversification and expansion of its Videoscape partnership efforts w ithconsumer electronic suppliers and content providers. Ciscos relative weakness in this area, needs to be addressed, not only to counterthe more extensive efforts of rivals in this area, but also to boost the prospects of embedding Cisco Soft Client technology in un-manageddevices. Head-end Systems Flexibility STRONG Benefit Cisco possesses strong video headend (HE) processing expertise and global deployment credentials. Cisco can boastsupporting AT&Ts IPTV HE, which is the worlds largest. Cisco has also supported major broadcaster video processing and distribution ofsignificant events, such as a partnership w ith NBC for delivery of the 2008 Summer Olympics and the 2010 Winter Olympics. Theacquisition of Inlet Technologies (i.e., Cisco Media Processor and Cisco Transcode Manager) brings multi-screen video transcodingtechnology into Ciscos portfolio, enabling Ciscos Videoscape solution to address PC and mobile ABR delivery in addition to traditionalSTB/TV delivery.

Benefit By extending Videoscape to mobile Internet scenarios, w ith its MOVE framework, Cisco is applying its medianet architecture torich mobile networks. Ciscos MOVE framework leverages its established video, routing, and w ireless networking expertise to advance itsmobile Internet proposition. The Content Application Engine (CAE) incorporates video transcoding software on Ciscos UCS platforms,providing a virtualized platform to adapt content for multi-screen/mobile video service delivery. Videoscapes integrated data center-basedapproach delivers a differentiated approach for scaling video transcoding by leveraging centralized and virtualized data center resources.

Issue While Cisco continues to make solid progress selling its encoder gear into the market, products from Ericsson, Harmonic andGoogle/Motorola continue to lead the broadcast and IPTV encoder markets. In addition, Ericsson, Harmonic and Motorola continue to makeprogress advancing their video headend platforms to support ever increasing video stream densities.

Issue Ciscos mobile video optimization technology (i.e., MOVEs video transrating and transcoding capabilities) is still in customertesting, and therefore unproven relative to more established products from rivals. In addition, Cisco has yet to distill how the Cisco MediaProcessor and Transcode Manager reconciles w ith Ciscos transcoding software development efforts related to the MOVE framework whichcould oblige operators to adopt separate solutions for addressing mobile applications.

Issue By incorporating video transcoding and transrating software unto its UCS and ASR platforms, Ciscos approach seems weightedmore towards centralizing and virtualizing video optimization scale in its data center and routing platforms. The result is that Ciscos MOVEframework potentially increases overall bandwidth consumption as more transcoded formats need to flow across more of the network.This is in contrast to some emerging approaches (from Envivio, Juniper and RGB) that look to send intermediate mezzanine contentformats to the network edge for final adaptation and packaging for various device profiles. Cisco could face critiques that it is just shiftingtraffic optimization around the network. IPTV Portfolio Diversity and Depth OUTSTANDING Benefit Ciscos multi-screen solution set features a three-dimensional in-house product portfolio that few if any rivals can match directlytoday w ithout relying more on multiple partners. Ciscos approach is centered on the interdependencies between cloud, network andclients critical to the delivery of rich media experiences. The cloud elements include all elements of content preparation, ingestion, storageand management. The network elements include distribution architectures for a bi-directional content flows employing unicast and multi-cast streams. The clients emphasize a mix of managed and unmanaged devices for reaching IP-enabled endpoints.

Benefit The recent Videoscape products and portfolio enhancements (i.e., video in the cloud, Any TV Screen) tighten the cloud, networkand client elements of the overall Videoscape architecture, rendering the Videoscape proposition more compelling. This includes enablingoperators to realize the coordinated media, network and devices awareness required to scale consistent and high-quality unicast videoexperiences across multiple screens.

Benefit W ith the delivery of seven new Videoscape portfolio innovations, including new client technologies, such as the Cisco 9800series multiscreen gateways and Videoscape Voyager Vantage, new cloud components, such as the Videoscape Voyager Virtual, CiscoConductor, Cisco Media Processor and Transcode Manager and the Videoscape CDN Analytics network component, Cisco executes sw iftlyon delivering promised 2012 Videoscape roadmap products. This gives operators the assured confidence to invest in the Videoscapearchitecture to meet the challenges of supporting multi-screen IP video services.

Issue Cisco lacks direct portfolio assets in the telco access sector today (w ith the exception of active/P2P Ethernet FTTH solutions).

Thus, the company remains somewhat vulnerable to the pace of rivals driving and influencing PON/FTTx/VDSL2 deployments, impacting thesales progress of its overall IPTV/multi-screen solution proposition.

Issue Although Cisco, via its video networking assets and related IP NGN assets, possesses undeniable credibility w ithin the cablespace for scaling video applications, its established traction in the IPTV space primarily centers around IP STBs and aggregation/corerouting infrastructure. IPTV solution rivals w ill continue asserting that the jury is still out as to how much further influence and significanceCisco can achieve w ithin the telco IPTV market, e.g., in terms of scaling efforts vis--vis their own established and broadly deployedIPTV/IP video solutions.

Issue Related to the lack of telco portfolio assets is Ciscos lack of traditional mobile RAN assets. While video networking is becomingmore important to mobile operators, radio networks still garner much of the attention from mobile operators. Likew ise, Cisco is vulnerableto RAN vendors who are ramping up their video networking capabilities. Cisco, unlike those vendors, cannot supply an end-to-end networksolution. IPTV Professional Service Integration Package STRONG Benefit Ciscos Advanced Video Services Group possesses more than 55 years of experience in the media industry, and continues tocapitalize on expanding digital media/IPTV integration opportunities. Evidence of continued traction and momentum for Ciscos AdvancedVideo Services Group includes end-to-end systems integration w ins at Virgin Media in the UK, Rogers Cable in Canada, YES in Israel, iPlusdecoder w in w ith Digital+ (Spain), CDS for VoD w ith NET (Brazil), VoD launch and integration w ins at ASTER in Poland, and supportingNumericables 3-D consumer service launch.

Benefit Cisco differentiates its HE/IPTV service integration package in areas such as video acquisition, video processing, videoencoding, and video management building blocks that are essential for any successful video service. This includes, for example, videoacquisition dimensions such as the physical location of satellite receivers, signal conversion, and off-air and fiber receiver capabilities thatrequire years of video-specific experience to master.

Benefit Ciscos Advanced Video Services Group possesses the expertise to integrate Cisco and third party applications andinfrastructure to enable service providers to launch video services rapidly and cost effectively. Ciscos Advanced Video Services Groupdelivers project management, testing, installation, configuration and training support to service providers.

Benefit Cisco supports The RedPlayer service offering combining Red Bee Media's origination, digital content and media managementservices w ith key elements of the Cisco Videoscape platform, creating a one-stop shop for content owners to build and expand secure,Media Grade' video offerings.

Issue - Cisco does not maintain the services profile of key competitors in the service provider network. It does not have the sameservices employee resources for example as an Alcatel-Lucent, Ericsson or NSN. It does not yet offer complex multivendor or networkmanagement services. It enjoys less breadth in terms of its telecom product portfolio (not present in the voice core or w ireless), limitingthe reach of its services relevance. Security and Digital Rights Management (DRM) Efficacy CONCERNS Benefit Cisco possesses an extensive track record in executing the content security aspects of traditional cable content offerings.Ciscos STB technology has consistently proven adept at supporting the conditional access technology required by both legal regulationand MSO network requirements to aid content security efforts.

Issue Successful service provider implementation of Videoscape w ill also require overcoming critical business model challenges.Specifically, the CDN intelligence that Videoscape offers, such as caching content in the gateway client devices, requires content owners toshift their current stances on content rights for distribution and storage. Similarly, Videoscapes more mobile proposition w ill also requireservice providers to earn the confidence of content owners to allow their premium content assets to be delivered and transferred frommanaged networks and devices to un-managed networks and devices.

Issue Cisco w ill continue to encounter rival fear, uncertainty, and doubt (FUD) directed at the companys long historical association w ithcable conditional access methods and the high-profile piracy and theft of cable content over the years (i.e., guilt by association). Suchchallenges w ill look to frame Cisco as being less nimble on multi-screen and IPTV security in relation to content security solutions thatwere purpose-built for IPTV applications in their origin.

Issue Motorolas incorporation of SecureMedia into its Medios solution puts the spotlight on Cisco w ith respect to how it w ill evolve itscontent security technology to address the grow ing preponderance of IP-based and multi-screen content delivery, where software-basedtechnology w ields competitive benefits in terms of lower OpEx and greater deployment flexibility than smart-card alternatives.

Issue While Ciscos Digital Media System and Media Experience Engine (MXE) offers visible watermarking technology, Cisco has notextended transparent digital watermarking insertion technology to support consumer video distribution, which is a critical enabler formulti-screen video delivery as well as premium video delivery to subscriber homes.

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