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Ericsson Bags Azuki Systems

Alan Breznick
2/6/2014
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Seeking to become an even bigger player in the developing TV Everywhere market, Ericsson is buying Azuki Systems, a startup focused on delivering adaptive video streaming and content protection technologies to serve content providers.

Ericsson AB (Nasdaq: ERIC) announced Thursday morning that it will acquire Azuki Systems and integrate Azuki's offerings into its own portfolio. Terms of the agreement were not disclosed, but Ericsson said it expects to close the deal by the end of this month.

In the press release announcing the deal, Ericsson said the acquisition will enable it to "accelerate the availability of new and compelling viewing experiences across a variety of devices and screens." Further, the company said the Azuki purchase will bring "additional key functionality related to the deployment of TV Anywhere services, as well as "a team of highly skilled software engineers from Azuki Systems."

Based in the Boston suburbs with its 49 employees, Azuki is currently one of Ericsson's smaller rivals in the congested multiscreen video space. Azuki, founded in 2008, has made its mark by developing an architecture that takes adaptive bit-rate streams delivered in one format, Apple Inc. (Nasdaq: AAPL)'s HTTP Live Streaming (HLS), and converts them to formats that end-consumer devices can handle. The firm's flagship Media Platform appliance, which hooks into a service provider's content management system (CMS), can carry out this conversion for live, on-demand, and online video programming. (See Azuki Pitches Simplified TV Everywhere to MSOs.)

With this technology in hand, Azuki has signed up mainly small and midsized cable operators, IPTV providers, and mobile operators, as well as a few major programmers. Its announced customers notably include CenturyLink Inc. (NYSE: CTL), Buckeye CableSystem , Bermuda CableVision , Home Box Office Inc. (HBO) , and Showtime Networks Inc. .

Ben Huang, head of global marketing for Ericsson's new Mediaroom unit, told Light Reading that Azuki's technologies will be incorporated into Mediaroom's offerings. He said the Azuki systems will enable Mediaroom to deliver video streaming of over-the-top (OTT) content, as well as out-of-home streaming, to its customers.

The big challenge for Mediaroom's customers right now, Huang said, is that they have to use different platforms to deliver content in the home and outside the home and different back-end platforms and work-flow processes to manage everything. With Azuki's systems hooked into Mediaroom's platform, he said, Ericsson will be able to offer "seamless" integration of in-home and out-of-home streaming and back-end capabilities to its service providers. Mediaroom, which Ericsson bought from Microsoft Corp. (Nasdaq: MSFT) last year, now works with 63 providers in 25 markets around the world.

Azuki also plays in the digital rights management (DRM) space. In the mobile market, for instance, it offers the Azuki Wireless Platform (AWP), an appliance that delivers live and on-demand with DRM protection to mobile devices, especially smartphones and tablets. (See Azuki Box Takes DRM Over the Top.)

Even with its acquisition of Azuki, Ericsson still faces plenty of competition in the TV Everywhere space. Other players include Cisco Systems Inc. (Nasdaq: CSCO), Harmonic Inc. (Nasdaq: HLIT), RGB Networks Inc. , and Envivio Inc. (NASDAQ: ENVI).

— Alan Breznick, Cable/Video Practice Leader, Light Reading

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mhhf1ve
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mhhf1ve,
User Rank: Light Sabre
3/3/2014 | 7:31:19 PM
Larger Trends?
Does anyone else think this is part of a larger trend for service providers to try to gain more control over content (especially video)? If so, what does it mean for the future when more operators are increasingly vertically integrated with content? 
albreznick
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albreznick,
User Rank: Blogger
2/28/2014 | 5:09:04 PM
Re: Looks like a smart move for Ericsson
My other question for you, David, is do you think Ericsson will rest there. Or will they be scooping up other small specialists as wsell?  
albreznick
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albreznick,
User Rank: Blogger
2/26/2014 | 9:53:29 PM
Re: Looks like a smart move for Ericsson
I'd agree with you there, David. Will be intersting to see how successful they are at doing that.  
David Dines
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David Dines,
User Rank: Blogger
2/19/2014 | 10:54:00 AM
Re: Looks like a smart move for Ericsson
I have not spoken to Ericsson yet about it and I have no insights into how they integrated their past acquisitions, so I have not formed an opinion. Though I would imgaine that Ericsson is pretty motivated to retain the team that Cheng built. 
albreznick
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albreznick,
User Rank: Blogger
2/18/2014 | 9:53:32 PM
Re: Looks like a smart move for Ericsson
I agree, David. And Azuki apperared to be gaining somne treaction too. Now the question is how well will Ericsson manage them and retain them. What do you expect to happen? 
David Dines
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David Dines,
User Rank: Blogger
2/6/2014 | 7:09:35 PM
Looks like a smart move for Ericsson
I have met the Azuki people and was very impressed by the people and I thought their approach makes a lot of sense.  It will be interesting to see how they are integrated into the larger company from a personnel and portfolio standpoint.
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