Motorola Acquires Open-Source IPTV Set-Top Maker

Motorola (NYSE: MOT) on Tuesday announced it has entered into an agreement to acquire a Swedish developer of Internet protocol-based digital set-top boxes.

Motorola will purchase open-source technology vendor Kreatel Communications, which provides a combination of set-top boxes, software and professional services aimed at offering stable and future-proof solutions for television services, namely, IPTV. Terms of the deal have not been disclosed.

Kreatel's Linux-based solution extends into the application and middleware layers, meaning the technology provides Motorola with flexibility to use it with a broad set of middleware solutions.

Preparing for Evolving Networks

The acquisition gives Motorola an IPTV portfolio that addresses the real challenges facing service providers worldwide as they build and evolve their networks, said Dan Moloney, president, Motorola Connected Home Solutions.

"Combining Motorola and Kreatel's strengths is immensely attractive to ... video networks around the world and provides a critical solution as service providers evolve their video networks in the future," Moloney commented.

Kreatel's customer base includes such heavy-hitting European broadband providers as Spain's Telefonica, Sweden's TeliaSonera, and the Netherlands' KPN. Kreatel brings over six years of experience developing and delivering innovative IPTV set-top software and hardware solutions to European telecom operators and ISPs.

Wanted: Flexible Platforms

Motorola said Kreatel's flexible set-top platform is a natural complement to its end-to-end digital video solution and particularly addresses the growing need for IPTV-based digital set-tops.

Motorola already offers flexible solutions throughout the cable, xDSL and fiber-to-the-premise (FTTP) video chain -- including network infrastructure, video headend and transport, MPEG-4 encoding and connected home devices.

The Kreatel team and IPTV technology will add another significant advantage for Motorola customers, the company said, by augmenting its existing portfolio and providing workable options for operators as they deploy video services.

IPTV: Is the World Ready?

Global IPTV revenues will top US$17 billion by 2010, TDG Research predicts. If those numbers hold up, then capitalizing on IPTV will be critical to the success of broadband providers and could offer an attractive opportunity to wireless providers.

Still, 2010 is four years from now. Is Motorola premature in its investment? Or is the company in an enviable position? IPTV is expected to have a place in the market, but there is some doubt as to how big a role it will play.

Let the Investors Speak

Technology integration is the biggest challenge to an IPTV world right now, according to David Britts, partner at ComVentures, an $8 billion venture capital firm that invests exclusively in communications technology.

"IP networks are not designed to handle video. There are bandwidth issues and latency issues," Britts told TechNewsWorld. "Consequently, Microsoft (Nasdaq: MSFT), Alcatel (NYSE: ALA.N) and others are trying to figure out how to get quality service to viewers. It's going to take a while to solve these technology challenges."

The Kreatel acquisition, which is subject to customary closing conditions, is expected to be completed during the first quarter of 2006.

Kreatel's management team and employees will remain based in Linkoping, Sweden, and be integrated into the Motorola Connected Home Solutions business.