First, service provider home-grown middleware platforms are likely reaching their scaleability, manageability, and service-differentiating thresholds, potentially opening up doors for significant middleware business. As the number of subscribers scales and the rate at which new services have to be added to stay differentiated, it is costly for service providers to maintain and further develop in-house designs. Not to mention, they are significantly challenged to keep pace with market-driven innovation. Lucent Technologies Inc. (NYSE: LU)’s newly-signed deal with Telefonica, for the future support and development of the Imagenio middleware, is the first example of this. Where Lucent magically comes up with IPTV middleware developers is a separate issue.

Second, open is the new closed, meaning that next-generation middleware platforms are being designed with interfaces more open to higher-layer services and applications. This is critical in enabling service providers to roll out differentiated services (beyond broadcast IPTV and basic VOD) by allowing application developers to quickly build services/apps on top of open middleware platforms. Siemens/Myrio is working on a next-generation platform due out this summer that is based largely on this principle. Telus Corp. (NYSE: TU; Toronto: T) and Cisco Systems Inc. (Nasdaq: CSCO)’s investment in Widevine Technologies Inc. , although not a middleware provider, is another signal that openness is a priority throughout the IPTV ecosystem.

Alcatel (NYSE: ALA; Paris: CGEP:PA) was first to articulate a strategy, largely based on its Microsoft partnership. This has served it well to date, but it could be dangerously close to the software giant if execution becomes a problem. It has its own software in its back pocket if things go awry and long-term options with the Lucent/Orca Interactive Ltd. partnership and newly defined Lucent/Telefonica relationship given the pending ALA/LU merger.

Cisco remains relatively agnostic on the middleware front, which could prove to be smart, as the IPTV market is still in its early stages. Cisco can also leverage the extensive middleware partnerships that Scientific Atlanta has in place. Scientific Atlanta’s IP STBs are designed primarily to support Microsoft and Siemens/Myrio middleware.

Huawei Technologies Co. Ltd. ’s end-to-end IPTV story is relatively weak, to be honest, although it is working with Cascade Ltd. on the middleware side for some initial deployments in China. Huawei does not view IPTV as high of a priority as its peers do, and is growing its revenues significantly in areas outside of IPTV.

Lucent is late in getting its IPTV story together, but has recently partnered with Orca, a respectable middleware player. The Telefonica Imagenio middleware opportunity is another positive point for Lucent, depending on what it translates into in the field.

Nortel Networks Ltd. is struggling with its IPTV position, and its recently announced Minerva Networks Inc. middleware partnership isn’t enough to give it much momentum. An acquisition of Siemens Network Communications business, as recently speculated, could bring it a long way in the IPTV world.

Siemens made the right move with Myrio middleware and, combined with its infrastructure products and home networking CPE products, is piecing together a good IPTV strategy. Enabling the Myrio team to execute without getting bogged down in Munich-driven strategy will be key to its success. A speculated Nortel acquisition could slow things down and add confusion.