Last week we mistakenly mistyped that it was Cisco that has bought Tut Systems and the IPTV follower among you would have known that it was in fact Motorola that had acquired Tut late last year.
Neither one of them, on the face of it appears to need an encoder operation. Motorola offers encoder services to the cable community, as does Cisco acquisition Scientific Atlanta, but encoding for IPTV is somewhat more advanced and more tricky than for cable, and behind Motorola’s encoding efforts for AT&T is tiny US company Modulus, and yet it felt the need to acquire Tut, perhaps with the intention of offering its technology and customer base to Modulus and acquiring the whole shooting match some way down the line.
With Arris acquiring Tandberg in January, paying 4 times revenues at $1.2 billion, it has left Harmonic as the dominant encoder specialist that remains independent, and we think it cannot stay independent for too long into the future. First Modulus is likely to be a target before someone stumps of the big bucks that it will take to land Harmonic.
But the fate of the various middleware players is what we were debating last week, on the back of rumors about the fate of US IOC IPTV supplier Minerva, and on the assumption that the islands of technical know-how in IPTV are merging into continents around the various heavyweight telecommunications equipment suppliers.
The IPTV market has been in consolidation for the past year or two and with rumors about Minerva being put on the block, it looks like it is set to carry on for a while yet. Minerva is one company that got out of the competitive and R&D intensive encoding business, and made it clear that it was a middleware play last year and has had nothing but success since, targeting US IOCs.
The IPTV market has always preached that without middleware there is no core function to demonstrate IPTV, and the debate has moved to faster channel change, high reliability and flexible operator EPG interfaces, all created by smarter middleware. Some would say that with no middleware you are under someone else’s control when it comes to IPTVand that’s not good for a major equipment supplier, ask Alcatel after its recent experiences at AT&T.
Tight integration with set tops, with DRM and with VoD services and trick play for DVRs, all stem from how the IGMP in the network is structured and the IP stack in the set top. Middleware in this market is a term for anything the customer can interact with, so that’s the UI in customer devices, programming assets, billing, service information, on screen messaging, electronic program guides, content ingest and customer provisioning.
So if the fight is under way for the hand of Minerva, then Cisco would be crazy to give it up without a struggle. Turning this around, if Minerva investors are thinking of cashing in, then they would be crazy to do so without letting Cisco make a bid. So rumors of Nortel about to buy Minerva concerned us. Is Cisco NOT in the market for a middleware play? If not what exactly IS its IPTV strategy?
Back at IBC in September, there were numerous new IPTV middleware offerings brought to market, but none seemed mature or ready for prime time with a rapidly scaling network. Companies like Dreampark emerged out of nowhere, Thomson bought out the code base for the France Telecom MaLigne TV system and cable VoD specialist Seachange even joined the fray with its own, mostly VoD, system.
But even if there are 30 middleware packages out there, a large telecommunications equipment vendor cannot mess about attempting to deploy a multi-billion dollar network based on software that is not proven.
Which means that whichever company doesn’t get their hands on Minerva, must go after Israel’s Orca, already attracting the attention of Comverse.
A few months down the road and we could easily see the pairings of Alcatel with multiple middleware offerings, Nokia-Siemens with Myrio, Cisco and Nortel with Minerva and Orca, and Ericsson with Kasenna, while the Chinese UTStarcom would become a target for local suppliers like Huawei. And then the battle for IPTV services would be purely driven by the big equipment suppliers. Game over.