Scientific-Atlantia (SA), a leading manufacturer of cable television, faces strategic challenges in the mid-2004. For decades, cable operators face high switching costs, which locked them into exclusive supply relationship with either SA or several large rival, Motorola. SA has developed a technology that significantly reduces the cost of switching, and it is positioned to capture market share, because it has a 18-month gap in the development of Motorola cable boxes that include digital video recorders (DVR). Cable operators offer DVRs to stop losing subscribers to satellite TV. The case asks whether SA should actively seek opportunities to cast their consoles in cable systems that were previously employed only Motorola gear. If so, to what extent SA cable operators subsidize remaining costs of switching? Are there risks of introducing competition into what had previously been a stable duopoly? SA also explored policy options to deal with the transition to all-digital television technology and consumers growing demand for solutions to manage their digital media files (photos, music, etc.). Asks whether SA should continue to provide integrated, property, end-to-end transmission solutions, or conversely, embrace more open "ecosystem", relying more heavily on third-party software and hardware vendors to offer solutions and elements on the basis of the reorganization. Rewritten version of the previous case. "Hide
by Thomas R. Eisenmann Source: Harvard Business School 21 pages. Publication Date: June 9, 2004. Prod. #: 804191-PDF-ENG
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