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.”