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Motorola Buys a Leg Up in IPTV

Motorola  announced that it intends to buy digital video distribution technology vendor Tut Systems  for $1.15 per share of common stock, amounting to approximately $39 million in cash. The deal is expected to close in the first quarter of 2007.

Tut provides digital-video encoding, processing and distribution products.

Notably, Tut technology supports MPEG-2 and MPEG-4, resolution and compression standards that are higher than MPEG-1, and are a prerequisite for anyone trying to maintain quality while transmitting video over bandwidth-starved IP networks.

Tut technology also supports local ad insertion, forward error correction and real-time conditioning of video and audio.

The deal would strengthen Motorola's appeal to telcos interested in providing IPTV  by expanding its ability to help service providers deploy advanced video services.

Those services include error correction, also known as hamming, which allows the network to reconstruct the content of a dropped or lost data packet.

Tut will be integrated with Motorola's Connected Home unit, which has been active on the acquisition front lately. Motorola added both Netopia and Good Technology in November, and both are expected to help Motorola add share in the burgeoning IPTV market.

The "combined portfolio will provide service providers with next-generation solutions for delivering rich video experiences into the connected home -- and out into the world," said Dan Moloney, president of Motorola's Connected Home division, in a statement.

IPTV is seen as a way for telephone companies to enter the video market, which is now controlled by cable and satellite.

IPTV uses a two-way digital broadcast signal sent through a switched telephone or cable network by way of a broadband connection, along with a set-top box programmed with software that can handle viewer requests to access media sources. Connected to the television, the set-top box handles the task of decoding the IP video and converts it into standard television signals.

Motorola competes in this market with Cisco  and Microsoft .

In addition to set-top boxes, the IP technology could also be used by Motorola's wireless business unit to improve the quality of video transmissions to handheld devices like the Q.

Motorola's Network and Enterprise unit also got a shot in the arm earlier this year with the acquisition of Symbol Technologies.

The acquisition of Tut "makes industrial sense if Motorola can escape the silo mentality and share that technology across multiple devices," Ptak, Noel & Associates analyst Simon Forge told internetnews.com. "There's a lot of commonality in the basic systems engineering that would be quite useful."