Microsoft may do something it rarely does: sell off an asset. Ericsson AB is in talks to buy Microsoft's IPTV business, according to Bloomberg.
Microsoft Mediaroom may not be a household name like Xbox, but it's nevertheless the world's most deployed IPTV platform. Mediaroom-powered TV services are being offered by more than 40 of the world's leading operators, delivering services to more than 11 million consumer households equaling more than 22 million set top boxes deployed throughout the world. Clients include AT&T, Deutsche Telekom and TELUS.
According to Bloomberg, Ericsson, the largest maker of wireless networks, could announce a decision to acquire Mediaroom within a few weeks. The motive: to boost its software and services. Microsoft doesn't need Mediaroom anymore because it is delivering TV through the Xbox game console, Bloomberg reports. Neither Microsoft nor Ericsson could immediately be reached for comment.
Strategic All Around
Rob Enderle, principal analyst at the Enderle Group, said the deal makes sense for both companies.
"For Ericsson it would be a good win," Enderle told us. "Mediaroom is natural flow because the technology would get Ericsson back in more tightly with AT&T as a provider. It's also a natural fit for Ericsson because they do telephony -- and back-end telephony for the most part. So the Mediaroom technology is much more for Ericson than it turned out to be for Microsoft.
The move to on-demand streaming technology and away from the more traditional programming delivery method has meant IPTV is not of strategic importance to Microsoft anymore, Enderle said.
"Microsoft is instead trying to do content deals," he said. "Having this IPTV engine just didn't prove to be an advantage to getting where Microsoft needed to go. This is what a mature company does. It keeps the things that are strategic and sells off the things that are not."
Possible prices for the acquisition weren't mentioned in the Bloomberg report, but the Mediaroom platform is clearly valuable in the marketplace. Mediaroom is customizable and configurable for any market and competitive landscape, according to Microsoft, and it powers television and video services across TV, PC and mobile screens.
That means service providers can offer a custom set of services to attract and retain subscribers. Microsoft bills Mediaroom as beneficial to operators who want to increase efficiency, expand their reach and gain the ability to scale while providing TV experiences that grow subscriber loyalty.
Mediaroom also would position Ericsson as helping operators leverage the potential of an app-enabled world. And the Mediaroom video-on-demand storefront makes possible rentals and purchases through a menu system and gives subscribers instant access to movies and entertainment.
Finally, with the Mediaroom Advertising Platform, service providers have a chance to generate additional revenue opportunities that make possible targeted delivery of ad content across multiple devices and form factors.