IPTV Is Entering Phase II: Thomson
As the newly appointed general manager of Software Service Platform at French vendor Thomson S.A. (NYSE: TMS; Euronext Paris: 18453), he is heading up one of the triple play sector's most influential and experienced players, just as the rapidly expanding IPTV sector enters a new phase.
Thomson's SmartVision middleware platform, acquired in late 2005, underpins the IPTV services at Orange (NYSE: FTE), one of the world's most successful TV-over-broadband service providers. (See Thomson Buys IPTV Player, France Telecom: 'More IPTV, Please', French Carriers Ramp Up IPTV Subs, FT Preps UK IPTV Launch, and Thomson Boasts IPTV Success.)
And now, to add to a number of smaller deployments, Norway's Telenor Group (Nasdaq: TELN) is deploying the service delivery system across its Northern European empire, giving the platform its second major customer reference (though Thomson is yet to officially announce that engagement). (See Thomson, Ericsson Bag IPTV Deals, Thomson Wins Irish IPTV Deal, Thomson Wins IPTV Deal, and SiOL Does IPTV With Thomson.)
Add to that Thomson's reputation and expertise in traditional broadcasting -– the company knows as much as anyone about TV technology –- and its strong position in the home gateway and set-top box sectors, and you have a company with, arguably, an unparalleled position in telco TV and triple play. (See Thomson Unveils New Gateways, Thomson Adds Femto to Gateway, Thomson Ships to DirecTV, Thomson Hits Milestone, BT Gets a Gateway, and Thomson, IP.access Team.)
That gives Schutte a strong hand and solid foundations to build upon.
Yet, despite all that, the name 'Thomson' is not synonymous with IPTV.
Instead, the names most often associated with the still emerging sector are those of key rivals Alcatel-Lucent (NYSE: ALU) and Microsoft Corp. (Nasdaq: MSFT), the latter of which is firmly in Thomson's sights. (See French Firms Take On Microsoft.)
Schutte, who joined from AlcaLu in early February, and had previous experience with telco TV firms Thirdspace and nCube, recognizes his new firm's brand awareness shortcoming, and aims to do something about it. (See Thomson's Sharp Schutter, C-COR Acquires nCUBE, and Alcatel Denies iMagic Fadeout.)
"Things will change," he tells Light Reading. "We have a number of major contract wins we haven't been able to announce yet, and in some of those deals we have replaced the existing supplier," he claims, declining to identify which rivals Thomson may have unseated, or where.
IPTV market evolution
Schutte believes Thomson will attract greater attention and become a bigger name in IPTV as the market evolves during the next few years. He believes carriers, especially those that have experience with video services, are moving on from the traditional view of IPTV as a separate, standalone service to a more integrated approach based around converged, IP-based services, including VOIP and Internet-delivered, or "over-the-top," video.
But it's not something that will happen overnight. "By 2010 or 2011 the focus will be on blended and converged services, and new mechanisms for delivering video services," reckons Schutte.
That, at least, is what Thomson is hoping for as it pushes forward with its converged IPTV/VOIP platform developments and investments. (See Thomson Targets IMS and Thomson Fuses VOIP & IPTV.)
IPTV and M&A
By that time, Schutte believes the IPTV sector will have undergone significant consolidation -- a process that is already underway, of course -- with Thomson one of the active, rather than passive, players. (See FT Unit Reels In Orca and Ericsson: Tandberg Is Key to IPTV.)
"This sector needs consolidation sooner rather than later, and Thomson will act as a consolidator rather than be consolidated. We'll look to strengthen our portfolio and our partnerships," with a view to becoming a key technology provider to cable operators, wireless players, and pure Web services companies as well as regular telecom operators, notes Schutte.
But Schutte still expects to see a steady stream of new entrants. "It's an aggressive market and there will always be room for smaller players" that can target business at the Tier 3 operators, local service providers, municipalities, and utilities players. The small specialists "can differentiate against the likes of Thomson, Microsoft, Nokia Networks , Ericsson AB (Nasdaq: ERIC), and Alcatel-Lucent."
The consolidation process will happen more in the "middle layer, in companies where there is more of a mix of technology, applications, and service capabilities," and will also include the outfits that have developed IPTV technology in-house for specific operators.
That, then, would include the teams that have developed technology for many of the world's biggest current IPTV operators, such as Iliad (Euronext: ILD), PCCW Ltd. (NYSE: PCW; Hong Kong: 0008), Neuf Cegetel Group (Euronext: NEUF), and Fastweb SpA (Milan: FWB). And it's a consolidation process that already has a precedent, as Lucent took over the development of Telefónica SA (NYSE: TEF)'s capabilities in 2006, and has now developed the Spanish giant's platform as part of its MiView IPTV offering. (See Top Ten: IPTV Carriers and Lucent, Telefonica Team on IPTV.)
IPTV's next phase
That consolidation process will be part of the IPTV sector's next phase of development, which will be driven largely by the market's early movers. Schutte reckons there's a window of about 18 months for operators that are widening their IPTV subscriber bases, during which they can concentrate on delivering and bedding down the initial TV-over-broadband service. After that first year and a half, those carriers start to look for add-ons such as interactivity.
"A lot of operators are now in that 18-month window, and are looking at other, blended services that will help them compete with their satellite and cable competitors. They have the capabilities, and they're under pressure to do something. Look at Deutsche Telekom AG (NYSE: DT) [a Microsoft IPTV customer] -- it now believes it's in a position to launch new services quickly and has initiated a competition on its [IPTV] platform," notes Schutte. (See DT Launches IPTV Competition.)
"IPTV is going to be a real catalyst for change, and will enable a lot of new services," believes Schutte. "Primarily, the marketing [in the IPTV sector] has been technology-led... but it's all about services and interoperability, not about pushing a technology."
— Ray Le Maistre, International News Editor, Light Reading