A booming IPTV market is resulting in communications infrastructure equipment manufacturers rushing into in a spate of mergers and acquisitions in order to better target telco customers.
Analyst firm iSuppli estimates that, at stake for these manufacturers, is a global market for IPTV telco equipment that is expected to grow to $22.1bn in 2011, up from $9bn in 2007.
"The OEMs are styling themselves as one-stop IPTV shops because of the telcos' lack of experience in video," said Steve Rago, principal analyst for networking and optical communications at iSuppli.
"To make up for this inexperience, the telcos require equipment suppliers that can address all aspects of a video network."
In order to acquire a complete portfolio of IPTV products and technologies, the tier-one OEMs are engaging in a spate of mergers and acquisitions, the analyst explained.
"Many of the tier-two OEMs, which are having difficulties in establishing beachheads in the IPTV market due to the telcos' desire for end-to-end solutions providers, are more eager to enter into mergers or strategic alliances with tier-one suppliers," said Rago.
Leading this "mergers and acquisitions frenzy" is Ericsson, which is positioning itself as a complete IPTV supplier with its purchase of Marconi in 2005, Redback Networks and Entrisphere in 2006 and its current pursuit of Tandberg TV.
Carl-Henric Svanberg, president and chief executive at Ericsson, stated at the firm's annual general meeting that IPTV will have a transformative impact on telecoms networks.
ISuppli expects the mergers and acquisitions activity to sustain its fast pace in 2007 as OEMs continue to round out their IPTV product portfolios.
The focus in 2007 will be on middleware, video-on-demand and possibly video encoding, the analyst firm predicts.
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