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IN PERSPECTIVE: Convergence

October 31, 2007 By Brian Santo, Editor

Consolidation in the vendor community continues apace. Not many years ago, there were nearly a dozen CMTS vendors. Now there are three majors: Cisco, followed by Arris and Motorola.

Brian Santo
Innovation is farmed out
to startups who thrive
on venture capital.

It had long been assumed that the market would be whittled down to just three CMTS vendors, though BigBand Networks persists as a fourth.

Motorola in the last two years purchased Modulus Video, Broadbus, Kreatel, Tut Systems and Netopia.

Cisco consumed Scientific Atlanta in 2005, and since then, bought another two dozen smaller companies. And as this issue of CED went to press, Cisco announced its purchase of Navini Networks for $330 million, shoring up its position in WiMAX networking, especially vis-à-vis Motorola, which has been concentrating no little effort in that area.

Arris made a play for Tandberg Television earlier this year, but was edged out.

Neither discouraged nor dissuaded, Arris turned around and swallowed up C-Cor for $730 million (see page 6), getting itself into on-demand technologies, and fiber-based access.

Arris lost TandbergTV to Ericsson. Last month, Ciena bought PhyFlex.

With convergence, there are a lot of bases to cover, and size matters. Cisco and Ericsson are both fairly sizable; Motorola nearly so. Arris and Ciena see the need to be bigger. Companies such as Nortel and Alcatel-Lucent who have the size, but not necessarily the position, will bear watching. They are by no means alone.

Some may lament the shrinking universe of vendors for the lack of numbers, but that’s the way markets have always worked. In the past, consolidation among vendors also raised concern about the inhibiting effects on innovation.

That seems like less of a concern. The latest model for innovation is still fairly new, but seems to be perfectly stable and workable: innovation is farmed out to startups who thrive on venture capital. If their ideas prove out, they get bought. And while some companies the size of PhyFlex or Tut Systems or Navini might prefer to stay independent, the dearest goal of many other small innovators (and their investors) is to get bought out by someone larger.

The consolidation in the vendor community signifies the inevitable convergence of access networks. In this issue, Traci Patterson’s story on page 28 touches on one of those convergence technologies: fixed mobile convergence.

On page 20, you’ll find Mike Robuck’s article on OpenCable. OpenCable isn’t a classic convergence technology, at least from the networking standpoint, but there’s a case to be made for calling it one. It’s going to make the cable industry look monolithic, even if it isn’t entirely.

brian.santo@advantagemedia.com

Filed Under: Wire and Cable Tips

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