Ericsson Highlights Rising IPTV Competitive Threat with Telekom Austria Replacement

| Feb 16, 2010 | Digital Media Infrastructure | Analyst: Yoav Schreiber

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Event Summary

February 15, 2010 – Ericsson announced that Telekom Austria will exchange its current IPTV platform with Ericsson’s IPTV Solution. As the prime integrator for Telekom Austria’s aonTV service, Ericsson is delivering its IPTV middleware, OpenStream Digital Services Platform for video-on-demand, and WatchPoint Content Management System for multi-screen content delivery. Telekom Austria is also deploying Edgeware’s video delivery appliances via a strategic OEM agreement between Edgeware and Ericsson.

Analytical Summary

• Current Perspective: Slightly positive on Ericsson’s announcement that it has been selected to exchange Telekom Austria’s current IPTV solution with its own offering, primarily because it provides high profile validation at the Mobile World Congress that Ericsson’s “End-to-Endless Television” proposition is gaining market traction. However, while Ericsson deserves credit for highlighting its differentiated IPTV solution elements which enable it to successfully replace the incumbent Alcatel-Lucent IPTV solution, its showcase customer – Telekom Austria – may prove to be less than a prize horse, given the service provider’s relatively smaller IPTV subscriber counts and IPTV growth story.

• Vendor Importance: High to Ericsson, because the company needed to deliver market credentials for its newly unveiled “End-to-Endless Television” proposition which now carries the Ericsson brand (as opposed to the former TANDBERG Television brand). The Telekom Austria win demonstrates Ericsson’s multiple IPTV strengths, including a differentiated middleware offering with advanced graphical user interface, prime integration expertise, as well as related portfolio elements such as the OpenStream back-office platform and the WatchPoint Content Management System. Ericsson also pulls through its strategic on demand video server (ODVS) partner Edgeware, whose video appliances are integrated into Ericsson’s IPTV solution, displacing Alcatel-Lucent’s incumbent ODVS partner Concurrent.

• Market Impact: High on the digital media infrastructure (DMI) market, because of the strategic significance of competitive replacements, particularly in the IPTV market where early middleware solutions are vulnerable, as service providers evaluate alternatives to inject renewed growth and differentiation into their IPTV service offerings. From a competitive standpoint, the loss of an incumbent position cuts short cash flow accruals that are baked into corporate assumptions. In addition, by demonstrating success replacing Alcatel-Lucent’s IPTV solution, Ericsson augments its competitive threat vis-à-vis other incumbent rivals.

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Current Perspective

Competitive Strengths and Weaknesses

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