Motorola makes up for lost time with Kreatel buy

Motorola came out of the IPTV closet this week, spending an unspecified amount of cash to buy IPTV specialist set-top maker, Kreatel of Sweden.

Kreatel is credited with being among the first-ever set-top companies to focus entirely on IPTV and has had good success in the Nordics - with customers such as TeliaSonera - and elsewhere in Europe with Telefónica and KPN. The company recently opened offices in Shanghai in China.

The move catapults Motorola from its initial indifference in chasing IPTV sales closer to the market forefront as the area starts to attract bigger telcos. Motorola has a huge 50 per cent-plus market share of the US cable set-top market, where it handles head-end encoders, set tops, cable termination systems and full-scale implementation services and offers its own conditional access system.

So far in IPTV, Motorola’s moves have been limited to selecting a conditional access partner in Widevine, a move which acknowledges that, with IPTV, there is a reliable return path, which can strengthen how conditional access works and extends to more flexible DRM.

Motorola was recently prime contractor in rolling out a cable-IPTV hybrid for Verizon in its fiber-based Fios TV service. The question now remains whether or not Motorola will extend its IPTV offering to software. Motorola was also chosen for set tops by the AT&T Uverse IPTV service. It is just going to commercial trials now, where it works alongside Microsoft and Alcatel and shares the set-top contracts with Cisco buy, Scientific Atlanta.

If Motorola was to go on and acquire or partner with one of the handful of IPTV middleware companies, and add some back-end operational support systems, it could create a threat to market leader Microsoft and established players Orca (which partners with Lucent) and Siemens (who bought Myrio). Motorola may opt to remain only in the hardware segment of IPTV, where it is only short of an ISAM (IP DSLAM) offering.

Kreatel uses Linux-based set tops, which is a good fit with Motorola, which has developed its own brand of embedded Linux for use in about a third of its cellphone models.

Kreatel has some extensions of its own into IPTV application and middleware layers.

Motorola is also pushing its own brand of Ultra Wide Band for connecting the digital home with components that communicate at up to 480 Mbps signals.

The Kreatel agreement, 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 Linköping, Sweden, and be integrated into the Motorola Connected Home Solutions business.

The existing shareholders of Kreatel are ABN AMRO Capital, SEB Företagsinvest and Innovationskapital.

Copyright © 2006, Faultline

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