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Sources: Cisco Forming IPTV 'Ecosystem'

Light Reading
News Analysis
Light Reading
11/27/2006
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Cisco Systems Inc. (Nasdaq: CSCO) is solidifying vendor partnerships for its end-to-end IPTV distribution system, and sources say the Siemens AG (NYSE: SI; Frankfurt: SIE) / Myrio Corp. IPTV middleware platform might be its centerpiece. (See IPTV MiddleWARs: Far From Over.)

Light Reading first learned of Cisco's partnerships from vendor sources at the Telco TV conference in Dallas early this month. Word was that Cisco was ready to make an announcement at the time, but was prevented from doing so by last-minute squabbling over the agreement with Myrio.

A Cisco partnership with Siemens/Myrio could have major implications for the IPTV equipment market. Cisco would, in effect, be facing off against IPTV powerhouses Alcatel (NYSE: ALA; Paris: CGEP:PA) and Microsoft Corp. (Nasdaq: MSFT). IPTV infrastructure may finally become a two-horse race.

It wouldn't be the first time Cisco had aligned itself with Siemens when conditions were right. Light Reading reported Sept. 29 that the two have formed a consortium to respond to a large Orange (NYSE: FTE) RFQ (request for quotation) for IP Multimedia Subsystem (IMS) systems covering the carrier's fixed and mobile operations. (See Vendors Unite for IMS Pitch.)

Like Alcatel, Cisco would like to foster network hardware sales by pushing a compelling IPTV distribution solution to telcos. Cisco has been working on its IPTV story for some time, but the naming of its ecosystem vendors shows that it is rapidly getting its IPTV house in order. (See Alcatel Preps New Tech Roadmap.)

Besides Myrio, our sources say, Cisco's partner lineup would include Integra5 for client-side middleware, NDS Ltd. for conditional access and content protection, BroadHop Inc. for provisioning and subscriber management, and SES Americom for satellite transport. (See Integra5: Part of Cisco's IPTV Vision?)

Cisco has already acquired some of the other necessary pieces of its IPTV solution. It acquired Scientific Atlanta , which provides the video encoding and set-top box technology. It acquired KiSS, which provides networked digital video recording (nDVR) technology. More recently, it acquired Arroyo Networks, which provides VOD software. Cisco made another move toward the IPTV market by investing in the DRM and conditional access company Widevine Technologies Inc. in April. (See Scientific-Atlanta: Cisco's Sweet Deal?, Cisco KiSSes Up to Telco TV, Cisco Snatches VOD Vendor Arroyo, and Cisco Fertilizes Widevine.)

But in order for Cisco to make a game-changing entrance in the IPTV market it may need a strong middleware piece to pull all the parts together. Sources say Myrio trails only Microsoft TV in terms of deployment numbers to date.

Harmonic Inc. (Nasdaq: HLIT) VP of solutions and strategy Nimrod Ben-Natan says the addition of Myrio might have a cumulative positive effect on the entire Cisco video distribution system. "When you try to connect three pieces that are not as strong without the glue, which is the middleware in my mind, then you have a problem," says Ben-Natan.

Myrio and Cisco naturally aren't saying much about an impending partnership. "We do quite a bit of work with Cisco; we are generally quite aligned on a number of things," says Myrio CEO Chris Coles. Myrio has worked with Cisco to make its middleware integrate smoothly with Cisco/Scientific-Atlanta set-top boxes. But Siemens declines to say whether it has been in discussions with Cisco about a place in Cisco's IPTV ecosystem.

"Middleware is a critical piece of the IPTV delivery system, and provides a core foundational element for the consumer’s television experience," Cisco spokesman Wilson Craig writes in an email response to Light Reading. "As such, we've partnered with several key middleware providers to deliver IPTV platform solutions to customers."

Some of Cisco's other potential IPTV partners provided a little more insight. "Cisco pushing an IPTV story and is well positioned to grow into this part of the business," says BroadHop VP of solutions Kishen Mangat. Mangat says his company is part of Cisco's IPTV story. "We are the subscriber management layer between the network and the customer back end; we push policies down onto the middleware." Mangat says his company has been working with Cisco since 2005 and has landed 25 customers through the partnership.

NDS VP of market development Ian Tapp says his company has been working to integrate its digital rights management (DRM) system with Cisco's Scientific-Atlanta set top boxes, but couldn't comment on an alleged partnership arrangement with Cisco proper.

Integra5 also declined comment.

— Mark Sullivan, Reporter, Light Reading

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mocelet
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mocelet,
User Rank: Light Beer
12/5/2012 | 3:33:56 AM
re: Sources: Cisco Forming IPTV 'Ecosystem'

Cisco has been building/acquiring components of the IPTV value chain. Only major part missing in its portfolio seems like the access equipment.

Will they choose acquisition or in-house development path?

If they choose to go with acquisition, who are the best fit? Entrisphere? Occam? Calix? Tellabs?
rbkoontz
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rbkoontz,
User Rank: Light Beer
12/5/2012 | 3:33:56 AM
re: Sources: Cisco Forming IPTV 'Ecosystem'
Cisco will not acquire telco access equipment (tried that once in 1998). The market is commoditized, hyper-competitive, and fragmented across technologies and markets. Cisco will never enter a market with typical GMs < 35%! I expect Cisco to bless some "lucky" access companies with its ECOsystem partnership and allow them to take the shaft on pricing to win deals.
RTL Rules
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RTL Rules,
User Rank: Light Beer
12/5/2012 | 3:33:56 AM
re: Sources: Cisco Forming IPTV 'Ecosystem'
I can't imagine in-house development (unless it's nearly complete). If begun now, development would put Cisco 2 years behind the curve.

Since access equipment is rapidly becoming a commodity, I can't imagine buying a company whos product will see steadily eroding profit margins.

My expectation is that Cisco is already well down the path of qualifying a rebranded commodity product from a partner supplier. For example, IPDSLAM from Huawei, etc.

RTL
mocelet
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mocelet,
User Rank: Light Beer
12/5/2012 | 3:33:55 AM
re: Sources: Cisco Forming IPTV 'Ecosystem'
Both of the comments make sense. It sounds like partnership fits better with Cisco's strategy.

What do you think about Siemens' Dasan Networks acquisition?

http://www.lightreading.com/do...

Does anybody know whether Siemens ever promoted their access equipment in North America?

Considering all the PR on Myrio-Calix IPTV engagements, I found it odd not hearing any partnership between Calix and Cisco. Any thoughts?
materialgirl
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materialgirl,
User Rank: Light Beer
12/5/2012 | 3:33:50 AM
re: Sources: Cisco Forming IPTV 'Ecosystem'
Vendors like GOOG are pushing more open iTV solutions. Since IP-TV itself is so 2004, the providers will probably stick with old solutions. Back to the TWX article, imagine if YouTube had to spend years trying to get licensed content onto their site.
Mark Sullivan
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Mark Sullivan,
User Rank: Light Beer
12/5/2012 | 3:33:50 AM
re: Sources: Cisco Forming IPTV 'Ecosystem'
Some people would say that Cisco is late to the game with the whole idea of an end-to-end IPTV solution. It's so 2004. It's so Microsoft. Do carriers still want this, or are they moving toward a more open "best of breed" solution?
mocelet
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mocelet,
User Rank: Light Beer
12/5/2012 | 3:33:49 AM
re: Sources: Cisco Forming IPTV 'Ecosystem'

Good point. One-stop solution may not be as desirable as in the earlier days. Since Tier-1A's have enough integration engineers to do that. However, I thought that the all ecosystem packages (cisco's, ala/msft's and nortel/minerva's) are created to ensure interoperability.

I heard interop horror stories when SPs were putting together all the small pieces together. The problem was never the resource or lack of experience, but some weird option in RFCx wasn't supported by one box or sw. Considering that, ecosystem stuff sounds like a good move for both Tier-1A or Tier-1B accounts.
slideruler
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slideruler,
User Rank: Moderator
12/5/2012 | 3:33:49 AM
re: Sources: Cisco Forming IPTV 'Ecosystem'
Mark -

Depends on the carrier. The Tier 1A carriers (ATT, BT, FT, NTT...the "T's") will likely follow a best of breed solution, since they have armies of in-house integration engineers, and big $ budgets to spend with IBM, Ericsson, etc, to tie it together. Other (still very large) SPs (Tier 1B's and below), look for as much pre-integration and packaging as possible - to enable them to get to 1-3 vendors max, with one obvious prime. In addition to the "one neck to choke" advantage, it also saves time and money.

As for "its so 2004" - not necessarily so...depends on your neighborhood. As an example, SPs in APAC and other locations are busy deploying new access networks (HSDPA, WiMAX and Ethernet/Fiber) (to break the evil monopolist's grip, MG!!;-) and are also determined to deploy new services & applications. Video - in whatever form you like to describe it - is one of these. Perhaps from a U.S. / Western Europe perspective, it is somewhat 2004 - but I'm not sure the rest of the world would necessarily agree.

I would expect to see a continued strong deployment of new access networks in APAC, SA, ME, Eastern Europe - and applications to go with them.

My .02

SR.
materialgirl
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materialgirl,
User Rank: Light Beer
12/5/2012 | 3:33:43 AM
re: Sources: Cisco Forming IPTV 'Ecosystem'
Dear Mocelet:
That is the point. These vendors want overly complex system, with every conceivable bell and whistle in there from day one. Not only does that allow them to charge more for their complex gear, it also allows them to miss the standard with some little "performance" tweak.

MSFT perfected this strategy with Windows, making sure some tweak in there would crash third party software. "Windows is not done unti Lotus won't run" was their inside goal. You can bet CSCO and ALA/LU want IMS to be as complex as possible, so some tweak in there locks them in like flint. This alone is an argument for the stupid, simple, networks.
steve@tvstrategies.com
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[email protected],
User Rank: Light Beer
12/5/2012 | 3:31:30 AM
re: Sources: Cisco Forming IPTV 'Ecosystem'
If you consider the alignments that have taken place over the past 12-18 months...

MOT + TUT = headend, transport, cpe

Alcatel-Lucent = 3 commercial middleware platforms (not including MSFT) plus end-to-end networking and best-of-breed allies across the IPTV ecosystem

Ericsson + Kasenna = IPTV + IMS + ecosystem partners

Nortel + Minerva = IPTV + IMS + ecosystem partners

Orca + best-of-breed across the IPTV ecosystem

Myrio + Siemens + best-of-breed AND vertical integration

Oh yes, and also Microsoft + multiple vendors implementing proprietary solution to create end-to-end ecosystem

...all of them chasing Tier-1s and Tier-2s, some also chasing Tier 3s....

Consider all of that, plus Cisco's recent acquisitions (Arroyo, S-A, et al), (AND the fact that Myrio is >1 yr into alliance with S-A), makes you wonder, doesn't it.

But Cisco representatives have been very quick to say that they are both middleware and access agnostic. We'll see!
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