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Video software

Thomson Buys IPTV Player

Ambitious French vendor Thomson (NYSE: TMS; Euronext Paris: 18453) is making a major move into the end-to-end IPTV systems market with the proposed €130 million ($155 million) acquisition of Thales Broadcast & Multimedia from its parent, Thales SA (Paris: TCFP.PA). (See Thomson, Thales Hook Up.)

The acquisition is the latest in a rapidly growing market that analysts believe is ripe for consolidation. (See Expect More IPTV M&A).

The deal will give Thomson: IPTV middleware; video-on-demand (VOD) server technology; mobile TV content delivery and management capabilities; video-over-IP test and measurement technology that analyzes and monitors multiple video streams across access networks; and quality of service (QOS) analysis tools for mobile TV.

Thomson is already a seasoned supplier of broadcast systems, including head-end encoders, compression technology, remote management systems, program insertion systems, IP-enabled set-top boxes, and home gateways. (See Thomson Shows Off Gear and Microsoft Soups Up the Set-Top).

IPTV is one of the hottest sectors in the telecom world at present. A recent Light Reading Insider estimated that service providers will spend $21 billion in the 2005 to 2010 timeframe on the technology needed to deliver TV and video services over broadband connections. (See Report: IPTV a Potential Goldmine and IPTV's Economic Realities.)

And given that the market is still in its infancy, Thales Broadcast & Multimedia is already a significant player, having generated revenues of €134.9 million, and an unknown amount of profit, in the 12 months to June 30, 2005. Thomson expects the acquisition to have a neutral impact on earnings in the first year and be accretive after that.

The news pushed Thomson's share price down a fraction, just €0.04, to €18.07 on the Paris stock exchange.

Thales's IPTV middleware, called SmartVision TV, has been deployed by France Telecom SA (NYSE: FTE) for its Maligne TV service, which had more than 140,000 customers at the end of September.

It is also being used by Iceland Telecom (Síminn), a deal won with partner IBM Corp. (NYSE: IBM), and Swiss cable operator Télégenève SA. (See IPTV in Iceland and IBM Scopes Out IPTV Party.)

In its press release, Thomson says the deal is part of its "Two Year Plan, which identifies electronic content distribution and the acceleration of the delivery of IP-based technologies as key growth drivers." A significant previous part of that plan was the acquisition in March 2005 of French softswitch vendor Cirpack. (See Thomson Buys Cirpack.)

With a full suite of IPTV and VOIP capabilities, Thomson is pitching itself against some of the biggest names in the telecom world, including neighbor Alcatel (NYSE: ALA; Paris: CGEP:PA) and Siemens Communications Group. (See Who Makes What: Telco Video.)

Alcatel has an IPTV middleware partnership with Microsoft Corp. (Nasdaq: MSFT), and recently invested in triple-play home gateway vendor 2Wire Inc.. (See Alcatel & Microsoft Going Steady and Alcatel Buys Into 2Wire.)

The French telecom giant is also a shareholder in Thales, owning a 9.5 percent stake. Alcatel and Thales were reportedly in talks about a potential acquisition recently to combine their telecom and defense capabilities, with some media reporting that Alcatel had made an unsuccessful bid to take control of Thales. Alcatel dismissed such suggestions, describing the discussions as ongoing communications between the closely linked companies. Alcatel had no comment on today's news.

Siemens has been building an IPTV story based on its access and customer premises equipment, its acquisition of IPTV middleware player Myrio Corp., and a number of strategic partnerships. (See Siemens Snaps Up Myrio, Siemens Boasts IPTV Success, and Siemens Gears Up for IPTV.)

As part of the acquisition agreement, Thomson and Thales will develop a "partnership relationship specifically in the domain of high-value video content management and distribution solutions for in-flight entertainment, security, and defense applications, leveraging their respective skills and expertise in these domains," the companies announced.

— Ray Le Maistre, International News Editor, Light Reading

digits 12/5/2012 | 2:50:56 AM
re: Thomson Buys IPTV Player So who's next? Looks like ownership of key enebaling systems is the way forward in the IPTV world. Will the likes of Lucent and Nortel feel the need to splash some cash on some video smarts?
paolo.franzoi 12/5/2012 | 2:50:55 AM
re: Thomson Buys IPTV Player
Lucent and Nortel?

Do they participate in wireline networking still? Okay seriously. Lucent barely participates in Wireline. Ask yourself these questions: 10 Years ago, what product categories had Lucent as a leader in Wireline Telecom? Ask yourself about today. Anything other than TDM Class 5 switches come to mind? Isn't Adtran more relevant to Wireline Networking than Lucent?

Okay Nortel. Well, they have lost Optical Leadership right? Okay they win Comcast, but are shut out in the ROADM market in the RBOCs. Who would have predicted that 5 years ago? Management is a mess. But at least they are changing. Lucent is sticking to their current team because they have done such a great job (heavy dose of sarcasm). At least the CS2K has traction.

Should you not be talking about Huawei taking over Lucent or Nortel?

seven
paolo.franzoi 12/5/2012 | 2:50:42 AM
re: Thomson Buys IPTV Player
voyce,

By basically System Integrating other people's products, does not make Lucent a Wireline anything. People will more and more go around them and straight to the carrier. Unlike the Enterprise Space, the carriers have huge Systems Integration Teams. As time goes on, these groups will take on the work.

seven
voyce_overipee 12/5/2012 | 2:50:42 AM
re: Thomson Buys IPTV Player 6 months ago I would have agreed with you all the way. But now Lucent lands SBC/AT&T and BellSouth. That's big. Whether they deliver is the big question. But they've done something right, at least on powerpoint.

That was Nortel two years ago with VZ. They screwed up that "exclusive" deal big time. But LU's approach is different than NT's i think. LU has some home-made pieces but a lot of best-of-breed parts from other vendors. So all LU has to focus on is getting the few homegrown pieces working and doing lots of testing and support and customer dinners. That they know how to do. And if they can't get even their homemade pieces working, there are replacement options.

NT on the other hand always tried to make every component, which is hard for a big slow corp to handle in reasonable time. They lost their momentum for big carriers in my opinion. But theyre still good with the medium sized ones and the MCS (not the CS2k).
voyce_overipee 12/5/2012 | 2:50:41 AM
re: Thomson Buys IPTV Player Maybe. or LU could acquire the valuable ones. my crystal ball is out for repairs.

I don't know about other guys, but i know one big carrier and we do not have a huge voip integration team. We have lots of people who work on integrating the OAM side, but the real technical know-how for voip just doesn't exist at the level we would need yet inside. we'd rather deal with one integrator as the go-to number. Of course it may not be LU, and it could even be a prof integration company. but we don't trust them as much, and they don't have the execs ear like big vendors do. And execs sign the purchase orders.
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