Ericsson says it will buy Microsoft’s Mediaroom for an undisclosed amount, a move that will give the world’s largest maker of mobile telecom equipment the lead position in the market for carrier IPTV solutions. Microsoft has an estimated 25% of the market for IPTV middleware, the software that powers set-top boxes. It competes in this market with Huawei and ZTE, companies which are also direct competitors to Ericsson. Mediaroom, which will become part of Ericsson’s BSS unit, is separate from Microsoft’s Xbox unit.
“When the telcos moved into TV, Microsoft became the platform of choice,” said Simon Frost, head of TV marketing for Ericsson’s BSS unit. Microsoft Mediaroom customers include AT&T’s U-verse, Deutsche Telekom’s Entertain, Telefonica, TELUS Optik TV and Swisscom. Frost said Ericsson hopes to add more cable and satellite operators to Mediaroom’s client base, noting that Ericsson has been working with these customers ever since its 2007 acquisition of Tandberg Television.
Ericsson says the global IPTV market is estimated to be worth $32 billion this year with 76 million worldwide subscribers, and to grow to $45 billion and 105 million subscribers by 2015. Per Borgklint, head of Ericsson’s BSS unit, says his company foresees 50 billion connected devices in the future, and that by acquiring Mediaroom Ericsson is getting “some of the most talented people within the field of IPTV distribution.”
Mediaroom employs more than 400 people worldwide and is headquartered in Mountain View, Calif. Frost said that since Ericsson has a major presence in nearby San Jose, most Mediaroom employees will probably not need to relocate.
Ericsson’s purchase reflects the growing importance to carriers of video-on-demand in general and set-top boxes in particular. Today Infonetics published a report on the explosive growth in the set-top box market, highlighting video gateways as a major driver of growth.
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