The IP set-top box market grew 55 percent in 2008, but such breakneck growth will not continue, according to the In-Stat report "Worldwide IP Set-top Box Market." Many telcos have already launched TV services, so there are fewer new customer prospects. In addition, the economic climate is sapping investment in new telco TV systems.

"Established telco TV providers like France Telecom, AT&T, Free, British Telecom, Deutsche Telekom, and China Telecom provided much of the subscriber growth that drives the demand for IP set-top boxes," said Michelle Abraham, In-Stat analyst, in a statement. "We expect this situation to continue in 2009 and 2010. However with few new deployments, unit shipments of IP set-top boxes will see only slight increases in 2009 and 2010."

The research also indicates the following:

• More than 50 percent of 2009 IP set-top box unit shipments in Western Europe are expected to have hard disk drives.

• Among the key technology trends are improved power management and support for 3D graphics, multiple codecs, and open software platforms.

• The average bill of materials for an HD IP set-top box is expected to fall below $50 in 2010.

• Motorola held onto the top market share position in IP set-top boxes in 2008, but its market share slipped from 2007 as Cisco ramped up shipments.

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