Motorola Grabs BitBand and Gains End-to-End Packet Loss Recovery for On Demand Video – Cisco Beware!

| Nov 17, 2009 | Digital Media Infrastructure | Competitive Update

| Analyst: Yoav Schreiber

Current Perspective: Positive
Vendor Importance: High
Market Impact: Moderate

Event Summary

November 16, 2009 – Motorola announced that it has signed a definitive agreement to acquire BitBand, an IPTV content management and delivery system specialist. Terms of the transaction were not disclosed, but it is expected to close in Q4 2009. BitBand will be integrated into Motorola’s Home & Networks Mobility business.

Analytical Summary

• Current Perspective: Positive on Motorola’s announced acquisition of BitBand, because it gains Motorola several telco/IPTV video server customers and field-proven expertise, which will advance Motorola’s growth prospects in this market area beyond its organic efforts, such as Motorola’s expansion of its video server portfolio with the B-3 Flash-based video server. However, the announcement somewhat undermines Motorola’s market positioning in the on demand video server (ODVS) and telco/IPTV markets given that it suggests the need to acquire either (or both) customers and video serving technology, evidenced by the product overlap between BitBand and Motorola. While the small acquisition size (supposedly valued at $10 to $15 million), will not immediately ruffle rivals, it is up to Motorola to integrate BitBand rapidly and demonstrate accelerated ODVS market traction, especially with telco customers.

• Vendor Importance: High to Motorola, because the acquisition suggests that Motorola needs BitBand to accelerate its positioning in the video server segment of the telco/IPTV market where Motorola has not yet gained significant customer traction. The challenge for Motorola will be to continue positioning the strengths of its own products (i.e., its B-3 flash-based video server and Adaptive Media Management framework for intelligent content distribution), given that it is acquiring overlapping products from BitBand, (i.e., BitBand’s Vision Ti4 flash servers and Maestro content management platform). The sleeper here is BitBand’s QualiCTV technology will bolster Motorola’s quality of experience (QoE) proposition with packet loss recovery and fast channel change technology to compete with rivals such as Cisco, Espial and Harmonic.

• Market Impact: Moderate on the content delivery system (CDS) segment of the digital media infrastructure (DMI) market. Motorola undoubtedly has significant presence in the overall video serving market, having shipped over one million video on demand (VoD) streams worldwide, primarily to cable customers such as Comcast, Charter, Time Warner Cable, WOW and Ziggo, demonstrating the company’s extensive track record in solid-state video serving/storage gained primarily through its 2006 acquisition of Broadbus Technologies. However, as the CDS market expands into advanced on demand services, IPTV, over-the-top and CDN-like architectures, Motorola needs to deflect the impression that its Broadbus-gained strength is waning. While rivals can paint the BitBand acquisition as evidence of Motorola’s relative weakness in the telco/IPTV video serving market, they should watch for Motorola’s leveraging BitBand’s QualiCTV solution as a rival to Cisco’s VQE.

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Competitive Positives and Concerns

Recommended Vendor Actions

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Recommended Competitor Actions

• Rival on demand video server (ODVS) vendors, should highlight their established differentiation and leadership vis-à-vis Motorola and BitBand, by pointing to their telco/IPTV customer market traction and product strengths supporting hybrid (i.e., centralized and decentralized) video server architectures in support of emerging CDN and OTT content storage and streaming.

• Cisco needs to continue emphasizing its medianets strategy for delivering an end-to-end, rich media-aware IP infrastructure for content delivery, which explicitly links Cisco’s IP NGN proposition with Cisco’s Service Provider Group products to reliably deliver content from the headend to user devices. In particular, Cisco’s VQE application supports the reliable scaling of multicast video transport with a dedicated focus on error repair, rapid channel change and granular, transport level IPTV statistics reporting. Cisco can point to market traction for its VQE with telcos such as GTA TeleGuam and Sonaecom in Portugal.

• Espial can contrast its telco/IPTV customer traction and packet loss recovery technology from Motorola/BitBand in order to demonstrate established leadership. For instance, Espial can highlight its real-time re-transmission technology within its MediaBase platform which addresses packet loss without additional network overhead or network elements (such as Cisco’s VQE server, BitBand’s QualiCTV server, or Harmonic’s ProStream 1000).

• Harmonic can highlight its deeper roots supporting the video serving requirements of telco operators in their IPTV deployments, with PCCW as its marquee customer. In fact, roughly 75% of Harmonic’s video server traction is in the telco space, where it is successfully leveraging the NEBS Level 3/ETSI compliant IBM x3650T hardware platforms for deployment in telco central offices.

• Concurrent and SeaChange should emphasize their own credentials shipping on demand video streams which easily exceed (and likely double) Motorola’s milestone of over one million VoD streams shipped. SeaChange can also highlights its customer traction with telco customers such as MTS Allstream (Canada), NTT (Japan), OTE (Greece), Telekom Austria, Turk Telekom (Turkey) and Verizon (U.S.). Both companies however should consider incorporating solutions for packet loss recovery into their value propositions in order to counter the established threat from Cisco, and the emerging threat from Motorola/BitBand.

• Edgeware can highlight its market and customer traction in both IPTV and OTT/Web streaming as evidence that its hardware appliance video server solution is gaining market traction. More importantly, Edgeware can highlight reseller agreements with Ericsson (and Alcatel-Lucent) which demonstrate the confidence of tier one vendors in its flash technology-based approach.

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Competitive Positives and Concerns

Recommended Vendor Actions

| Client access - Full report in Digital Media Infrastructure | More information

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