Deutsche Telekom Early Adopter of Apple TV Remote, Says UEI CEO
Universal Electronics Inc. is “gaining traction” with its Apple TV remote for MVPDs, said CEO Paul Arling on the company’s Thursday Q2 earnings call, naming for the first time Deutsche Telekom as one of its initial customers. It’s shipping to more customers he couldn’t name publicly, and the company is preparing for additional launches this year and in 2022. UEI is in discussions with “dozens” of customers about the product as the TV viewing landscape continues to shift, Arling said.
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Platforms like Apple TV Video Partner Program are the future for all types of MVPDs, regardless of size, who “now understand that the consumer wants that combination of everything they want to watch,” Arling said. Subscribers want local sports, reality TV programing and to binge-watch a favorite show streamed on Netflix, Amazon Prime Video or Hulu -- “or name your favorite service.”
Hybrid viewing is what the consumer wants, “and one way or another, the consumer is going to get what they want,” Arling said, saying operators globally understand consumer preference and are looking at ways to deliver it. Larger MVPDs can build their own platforms, he said, citing Comcast’s X1, which Cox adopted. Medium to smaller sized MVPDs “probably will find it better to borrow one of the other industry platforms,” he said, naming Android and TiVo in addition to Apple. UEI is “involved with all of them.”
Broadband operators are increasingly introducing IP-only or streaming set-top boxes, Arling said, noting Comcast Flex, DirecTV Stream, and TiVo Stream. International growth is also accelerating, he said, citing penetration with Liberty, Sky, Vodafone, and Orange in Europe, plus wins in Latin America and Asia Pacific.
The same trend is playing out for TV makers. UEI has hardware and software solutions for OEMs, supplying infrared, RF, and voice-enabled remotes, integrations in chip form and QuickSet software licenses. “We continue to further penetrate the product families inside the core TV platforms that represent over 30% of global TV demand,” Arling said, citing Samsung, LG, and Sony.
UEI received a favorable initial determination in an International Trade Commission patent infringement case against Roku, said Arling, saying the judge recommended issuing a limited exclusion and cease and desist order. The finding is under review by the full commission, with a final determination, “including the issuance of the limited exclusion and cease and desist orders,” expected by Nov. 10, he said.
For its part, Roku is pleased with the ITC’s initial determination findings "that two of the three patents asserted by UEI are invalid and that Roku has already successfully implemented technical design changes that eliminate any infringement of the one remaining UEI patent," emailed Joe Hollinger, Roku vice president-litigation and intellectual property: "For years, we have maintained that UEI’s serial patent litigation against Roku and its partners is meritless.”
Arling said companies including LG, Microsoft and Samsung have licensed UEI’s IP for “ease of use features” into their products. The patents at issue involve its QuickSet technologies, he said.
On the company’s QuickSet platform, which enables automatic setup and universal control of connected devices, Arling said early wins are in the HVAC segment. Initial implementations have been at the IP level with companies looking to add the technology to their device or application in the home control area. Beyond that, they look at how to “make it smarter” by connecting to other home control systems. The platform can discover, configure and control other home applications, a capability LG is using in its TVs, Arling noted, saying companies can “add themselves to this smart home ecosystem in a very efficient way.”
Semiconductor shortages in Q2 limited order fulfillment of Nevo Butler, UEI’s white-label, voice-enabled smart home and entertainment control hub. Shortages affected shipments for a major European telco, said Arling. Q2 revenue was $150.5 million, down from $153.1 million in the 2020 quarter, said the company. Revenue guidance for Q3 is $160 million-$170 million vs. $153.5 million in Q3 2020. Shares closed 7.4% higher Friday to $48.03.
UEI delivered a "bottom line beat, driven by rising software content," but revenue was "short of expectations" due to the components shortage and logistics issues, Colliers analyst Steven Frankel wrote investors Friday. Despite an anticipated $10 million headwind from component shortages in Q3, "guidance is inline with our expectations," he said.