Alcatel Buys PacketVideo Unit

PARIS -- Alcatel (Paris: CGEP.PA and NYSE: ALA) today announced the purchase of the Network Solutions unit of PacketVideo. This unit, mainly based in San Diego, California, has brought award winning video server technology to the mobile communications industry. PacketVideo Corporation, including its Device Solutions unit, is not part of the acquisition and will remain an independent company continuing to specialize in the development and integration of innovative multimedia software for mobile phone, videophone, camera and other device OEMs.

Recognized as a leader in multimedia technologies, PacketVideo was the first company in the world to demonstrate MPEG-4 video streaming to mobile devices, with standards-compliant and carrier-grade technology. With an established footprint among the leading multimedia content delivery solution providers in Europe, Asia and North America, such as NTT DoCoMo, T-Mobile, Orange, Mobilkom, New World Mobility and others, the Network Solutions unit of PacketVideo will strengthen Alcatel's offering for portals, application service providers, content aggregators and mobile operator customers, by enabling one-stop shopping for turnkey multimedia solutions.

This acquisition is another significant step in Alcatel's strategy to become a leader in broadband video solutions. Through this and the previous acquisitions in the video domain, Alcatel reinforces its worldwide market position in video solutions. Alcatel offers a broad range of mobile video solutions, spread over two segments: video communication (video messaging, video telephony, video conferencing, video mailbox) and video content delivery (video streaming, video downloading, video push).

PacketVideo Corporation, under the leadership of CEO Dr. James Brailean, will focus on delivering mobile media solutions to device and chipset OEMs. With Alcatel now backing its innovative server technology, this spin-off is a key step in the company's drive to enable the mobile multimedia marketplace. PacketVideo Corporation will continue to work with the Network Solutions unit acquired by Alcatel to ensure that end-to-end multimedia solutions provide the highest quality user experience possible.

"Video is all about sharing emotions. It's about seeing people face to face wherever you and they are, as well as accessing and sharing attractive video content in a ubiquitous manner. For this reason mobile video services are becoming more and more important to the entire mobile industry," says Etienne Fouques, President of mobile communications activities, member of the Alcatel Executive Committee. "The acquisition of PacketVideo's Network Solutions unit is a key step in strengthening our value proposition and solutions offering for our customers, who play a key role in expanding the market for data services."

"PacketVideo has been on the leading edge of the mobile media revolution for more than five years," said Dr. James Brailean, Ph.D., PacketVideo Chief Executive Officer. "We are very pleased to see mobile video grow from an idea in our labs into the highly capable video-enabled handsets now available worldwide. And we are confident that through this transfer to Alcatel, our server technology can scale globally to serve the growing mobile media market."

"We are committed to reinforce and build upon PacketVideo's existing channel relationships with outstanding companies like Siemens, NEC, HP and IBM," said Mike Barlow, Chief Operating Officer of the PacketVideo Network Solutions unit. "Our mobile operator and service provider customers will benefit significantly from our ability to expand our world leading mobile media solutions portfolio. The backing of a large, experienced and well respected organization like Alcatel will make a pivotal difference in the adoption of mobile multimedia."

Alcatel SA

PacketVideo Corp.