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Summary:

One of the most curious moves made by any networking company was Alcatel’s decision to abandon its IPTV middleware software in favor of Microsoft’s IPTV software, that may or may not work and is till in the distant future. Alcatel had carved up a nice little […]

One of the most curious moves made by any networking company was Alcatel’s decision to abandon its IPTV middleware software in favor of Microsoft’s IPTV software, that may or may not work and is till in the distant future. Alcatel had carved up a nice little niche in the business. I have not been able to figure that one out, and after reading Light Reading’s interview with Alcatel COO Mike Quigley, I still don’t get it. “It was no easy or obvious move for us to partner with Microsoft, but we took the view of the long term,” Quigley says in the interview. Now if I was Jon Stewart, I would raise my eyebrow to high heavens and ask the question, How long is (that) long term?

But since I am not Stewart, and my sense of irony is not that developed, I should stick to boring stuff like strategy, dollars and sense. Alcatel had sunk a lot of money in its IPTV effort, bought a few companies, and was using its DSL dominance and IPTV expertise to drive up demand for its IP edge routers among other things. The bet, per Quigley, is that Microsoft’s software will boost demand for its IP edge routers and other gear. Also there are those fat integration revenues – that is if and only if Microsoft software works.

I think it is as curious a decision as Alcatel’s decision to sell off its DSL modem business. Lose the modem business, and soon the other parts of the network start to slide away. Like the DSLAMs. That story for another day. Meanwhile, be sure to check out Quigley’s remarks – who know in three years it could be the smartest (or not) decision in the history of Alcatel.

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  1. Om,

    I tried to use http://gigaom.com/contact/ but the form is broken.
    I’d be happy to share some thoughts with you on the DSL modem business question that you alluded to.

  2. Thomas Hirsch Wednesday, July 6, 2005

    Is FTE/MSFT alliance relevant to ALA?

    Microsoft Expands Phone Push
    With France Telecom Partnership
    ….

  3. JC, the contact form has been fixed. :)

  4. Well, you raise reasonable points about the risk factor of Microsoft’s IPTV middleware actually working but I am guessing that Alcatel has come around to the logic that this is ultimately more of a platform play than a middleware play (i.e., the right content, well integrated into an IPTV platform with visual tools support on on multiple dominant device platforms) in a segment that Microsoft can’t afford to lose.

    Alcatel is obviously betting that having a 1+1=3 story wrt integration of infrastructure gear with this wave is better gravity to ride than living solo on the island of Alacatel. Besides, Microsoft usually figures things out by 3.0, right? ;-)

    Plus, it’s not uncommon for them to pony up loyalty dollars and unleash the marketing machine for such converts.

  5. The above comment is right on. Microsoft is providing a platform. The traditional middleware vendors that have been around for over 6 years were not really offering a software product, but video system integration (VSI). Alcatel invested in two of these VSIs and as a result is now the leading industry expert on IPTV deployments, based on its experience during the “experimentation” phase. But the existing “Heath Kit” approach, where every solution is a custom development, will not produce the market-changing impact that our customers need if they want to compete in mass-market television services.

    The marketing hype will tell you that Microsoft is focussed on delivering “betterâ€? TV and Alcatel wants to deliver a user-centric triple play experience. But it’s not only hype. “Better TV” will really begin happening with the integration of more applications onto a standard platform. Our strategy is to focus on developing applications that converge communications and entertainment services for a better end-user experience, and leave the IPTV platform to Microsoft to manage. This approach should greatly accelerate the availibility of mass market IPTV services. Meanwhile, as the comment above suggests, introducing a successful television service on a Telco’s wireline network will also cause significant network investment and pull-through sales of many of our products in the access, aggregation, edge and core parts of the network.

    Jim White, Alcatel

  6. Alcatel and Amdocs to deliver joint IPTV solution

    Alcatel has agreed to work with customer service systems company Amdocs to deliver a joint solution to support internet protocol television and other next generation broadband services …

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