Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Kevin Dede - Morgan Joseph.
Kevin Dede – Morgan Joseph
Could you give us just a snapshot of the competitive landscape, DBS, now, and where you think you are in the catch cycles there? Which products are the higher margin versus the lower margin, and how you expect that migration to proceed?
Rick Gold
The higher margin products have generally been the more recent products that are more fully featured, the products that address the HD, the multiple satellites, the ability to have multiple outputs, the ability to support DVRs, etc. We have, over the last couple years, been making a push to really focus on the high end products, and where we believe that our engineering expertise allows us to design products that, from both a performance and a cost standpoint, have advantages.
That said this is a very competitive business. Every product that either of the major operators is using is sourced from multiple suppliers, and there is a substantial amount of competitive price pressure in the market.
Going forward, we expect that we intend to participate in new design activity, where it makes sense, and particularly in those cases where we believe our technology base and our manufacturing supply chain allows us to compete effectively. We don’t anticipate that we will necessarily be participating in the highest volume, mature products, which are the ones that are at the greatest risk of commoditization and have the greatest price pressure. So, that’s going to be part of the calculation as we look forward.
There are also some special products that we are looking at currently, that are not necessarily the traditional LMB products, but special products where we can bring some of the expertise that we have in our wireless data business to bear on applications addressing satellite as well.
Kevin Dede – Morgan Joseph
Given the full features, multiple satellites, DVR, HD, where do you think your customers are in terms of upgrading their customer base, and how do you think they’re going to proceed? What demand does that put on you? And, more specifically, where do you think you stand in terms of market share on that high end versus the low end?
Rick Gold
I think there’s clearly a trend at both of the major U.S. operators towards the higher feature set, customer premise equipment. And if you look at the business that we serve, the outdoor customer premise equipment business, the bulk of shipments today is driven by either turn or upgrade, much more so than the actual net subscriber growth.
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