But embedded security is not likely to disappear anytime soon.

While the vast majority of set-top boxes (STBs) in the U.S. are now in compliance with the FCC's separable security mandate implemented in 2007, the international STB market is expected to carry on deploying the more traditional embedded security boxes.

There is concern among non-U.S. operators, however, that set-top makers will eventually decide they can no longer justify making embedded security boxes when the highest volume, by far, is with separable security units.

The two dominant U.S. STB manufacturers, Cisco and Motorola, with approximately 90 percent of their boxes now being produced with separable security for the U.S. market, will continue producing embedded security STBs – but with a realistic view of the changing global STB market.

"Both Motorola and Cisco still offer boxes with embedded security, mostly to Canada, which is the largest market not using separable security boxes," said Mike Paxton, principal analyst for the research group In-Stat. "The old DTC line is still productive and available, but there's not an emphasis on integrated security."

Widevine Cypher offers a content protection solution that secures linear broadcast, VOD, file downloads and streamed media.

(Click Image to Enlarge)

Though the emphasis has shifted to separable security in U.S. boxes, the demand for embedded security isn't likely to diminish anytime soon, particularly in foreign markets where the FCC's separable security ruling doesn't apply.

"There are second- and third-tier manufacturers like Pace, Samsung and Thomson that are interested in those markets, so it's probably a good idea for companies like Cisco to keep that market open. I don't see them phasing out embedded security boxes," Paxton maintained.

Motorola has no plans to phase out its embedded security set-top models. Ultimately, though, said David Goodwin, a Motorola senior product manager, "It doesn't make sense to support two formats."

Embedded vs. separable security may eventually become a non-issue for non-U.S. operators, anyway. "Some Canadian and Mexican operators are looking at the DCX because of the additional features," Goodwin noted.

Nor does Cisco expect to phase out its embedded security models anytime soon. According to Dave Clark, the company's director of product strategy and management, Cisco now produces about 90 percent of its STBs with separable security. But it won't abandon its embedded security business; at least not entirely.

"There are a few U.S. operators with embedded security, but outside the U.S. there's no urgency or desire to go to CableCard boxes," Clark said. "Why spend the capital that doesn't yield anything? We do see some opportunities overseas in the IPTV market, however."

IPTV is a growing market, reports ABI Research. It estimates that by 2014, nearly 79 million subscribers will have IPTV worldwide, a 32 percent increase. And cable and satellite TV growth rates are expected to decline during that six-year period.

Yet for STB manufacturers trying to crack the U.S. market, they'll have to deal with a tricky challenge. Added Paxton: "This is the market they have to go after, so they have to come out with boxes with separable security for [the U.S.] market. But there's no reason why they can't integrate security on a chipset like before."

European-based STB manufacturer Thomson, for example, recently launched its HD digital STB with an integrated cable modem – the DCI704 – which could signal future intentions for its U.S. market strategy.

For STB makers such as Cisco, however, the difference between STBs now gets down to software and middleware. Said Clark: "We can use internally developed silicon or work with third parties. Once in Europe, Asia and other markets, there are bigger differences with chipsets, etc. And some services are different, with three-tuner DVRs that don't support HD."

The challenge, he noted, is with the software. "The integration and implementation of software into STBs in the field, in the U.S. and global markets, is the challenge. And the new core features must be tested while keeping the 10-year-old boxes together."

In the meantime, cable companies and their vendor community have accepted, albeit grudgingly, the separable security mandate. "We've found that vendors have generally stabilized on their CableCard implementations and want no additional changes," said Jud Cary, vice president of video technology policy and deputy general counsel for CableLabs.

Rogers Communications, Canada's largest cable provider with 2.3 million basic cable subscribers and 2.1 million digital STBs in place, has no plans to stray from its strategy of buying and deploying embedded security boxes, with separable security being a non-issue.

"It has no impact on us. We'll continue using our current STBs," said spokeswoman Nancy Cottenden.

And that should bode well for embedded security STBs, particularly in overseas markets, and at least for the near future. "There is opportunity in the international cable market, and we'll leverage wherever possible those developments," said Cisco's Clark. "There's development in the IPTV market overseas, as well, and we will see next-generation STBs permeate other markets, which are looking at tru2way and other applications."

They are also looking beyond the traditional legacy devices that deliver video content. "Consumer devices are delivering Internet capabilities in the devices themselves, so flexible solutions are needed. Most operators are looking to get onto those devices ASAP, and all of those consumer device platforms can download security," said Matt Cannard, vice president of marketing for Widevine Technologies, a provider of separable security technology.

It's now a matter of when, not if, for operators, he insisted. "Operators must find a way to get content to multiple devices – or else. If they don't adopt devices that can be sold at retail and that can swap out security, the competition will."

Maybe so, but in the meantime, the STB landscape will be chock full of separable security STBs in the U.S. and embedded security boxes around the world, albeit with varying software and middleware nuances.

Concluded Paxton: "There's no word from Canada, Mexico or other countries that they will go to separable security. The model has proven to be secure, and U.S. cable operators are comfortable with it."