Putting an end to recent rumors, CommScope and ARRIS have announced that the former will be acquiring the latter, with the deal to close in early 2019. Both companies built themselves through a combination of internal developments and by making acquisitions; ARRIS with Pace, C-COR, Ruckus, a big piece of Motorola, Digeo, and others. While CommScope has not been particularly on the pay TV industry’s radar, the two companies appear to be a good fit for one another. As network suppliers, the solutions that they provide to the markets that they target are complementary to one another, which CommScope illustrates in their merger presentation of November 8 (see page 14).
So what about pay TV? Because of their solutions synergies, the two companies should be able to open new business opportunities for one another. ARRIS might see new opportunities in enterprises and private properties where CommScope offers fiber and LAN connectivity solutions and ARRIS adds TV CPE and Ruckus WiFi access. Similarly, CommScope could complement ARRIS (and former C-COR) solutions in operator accounts by adding fiber and copper connectivity and outside plant equipment. But the fact that this happened at all was intriguing to me: that ARRIS would build this formidable and comprehensive lineup of solutions – end-to-end, really – and then fold their hand.
You can argue that MediaKind (Ericsson’s to-be-completed-as-of-this-writing joint venture with One Media Partners) and Synamedia (Cisco’s recently consummated joint venture with Permira) have done the same thing, by spinning out “sub-optimally-performing” TV businesses into joint ventures. But while both Synamedia and MediaKind went out of their way to tell of their respective visions for the future at IBC in September, I didn’t get the same emotional connection from ARRIS.
But upon further reflection, it seems that ARRIS has been pulling back for some time. If you click down into individual units of ARRIS, I believe there have been some missed opportunities to stake out a leadership claim.
One could argue that ARRIS has been out there plugging away for Set-top Boxes, and devising new use-cases to keep the category alive. At IBC, I spent an hour with a senior ARRIS executive, and much of our conversation was about was about how screens are canvases. A valid and correct world-view, but a bit surprising since ARRIS discontinued the TV middleware and service delivery platform portions of the Elements software line after acquiring Pace. Not to mention the former Motorola Medios platform.
For another, their TV Security unit has three CAS (SecureMedia’s, and Latens/Pace’s – which overlap – plus Motorola’s/DigiCipher for cable and satellite), a DRM (SecureMedia’s), and a PKI service (Motorola’s). This gives ARRIS a comprehensive product-set and a strong set of technologies – but one in need of modernization. With the emergence of anti-piracy as a new market opportunity for video security (and one that all the security vendors are chasing, as opportunities for CAS and DRM flatten and dwindle), ARRIS has been silent – though it is entirely possible that it exists but simply hasn’t been announced.
There are opportunities, should the new company choose to pursue them. Outside of the Tier-1 operator category that ARRIS calls home, companies like Amino, MobiTV, Nordija, Minerva Networks and of course TiVo, are pursuing “infrastructure modernization” and “cap-and-grow” opportunities with Tier-2 and larger Tier-3 operators, and surely they wouldn’t be doing so unless they saw opportunities there. But because ARRIS sold Digeo/Moxi to Espial last year (now branded as Elevate Cloud), ARRIS had already pulled one foot out of that water. Ironic because platforms “-as-a-Service” have attracted such strong interest.
Other questions remain. For example, what about the ARRIS portion of the joint venture with ActiveVideo and Charter? What role, if any, will majority-owner-to-be Carlisle Group take?
At CES 2013, Verizon Communications showed off a variety of updates for its FiOS TV service, as well as a demonstration of the forthcoming Redbox Instant service from the Verizon-Coinstar joint venture. Read this article on Telecompetitor…
If you own an Apple device and are ‘environmentally conscious,’ an October 16 story in Wired entitled Greenwashing the Retina MacBook Pro may be of interest to you. Essentially, the article says that despite this computer’s certification as an EPEAT Gold device, the spirit of the certification is questionable. One reason for concern is that Apple markets itself as a ‘green’ company, and yet it no longer registers its devices with EPEAT.
Environmental concerns may be a bit abstract for most consumers, but this erosion of Apple’s ‘green’ ethos reflects some apparent changes in design philosophy within Apple that have an impact on all Apple users. It points to a philosophy of planned obsolescence and disposability, which Apple’s service and product life-cycle practices serve to reinforce.
Apple’s current generations of mobile phones and media players are sealed and not designed for disassembly or maintenance by their users. As the EPEAT situation shows, Apple has extended this design philosophy to the latest Retina MacBook Pros. As a result, most Apple hardware products are no longer ‘user upgradeable.’ This lowers the cost of manufacturing, and provides incentive (coercion?) for consumers to buy an AppleCare service agreement. So it’s all good for Apple.
But it’s not good for consumers. Let me give you an example of the impact on this philosophy on an Apple user: me.
I bought a fourth-generation iPod Touch – new – in 2011 and had it until a few months ago. After owning the device for about 14 months – just a couple of months beyond the basic product warranty period – it suddenly stopped working. The reason was that the battery had expanded, forcing the case open; and making the touch interface useless. Since I hadn’t bought an AppleCare extended warranty (Why? I don’t know), it would have cost so much to repair the device that repair made little sense. Apple applied its salvage value to my purchase of a new iPod. In effect, this cost me more than $300 – between the cost of the original device and the replacement.
AppleCare for laptop computers runs out at the end of Year 3. Users have three choices at the end of that period: 1) buy a third-party warranty, 2) take the risk and fly without a service agreement, or, 3) sell or trade in your machine for a newer model – revenue-assurance for Apple.
This hardware situation is bad enough, but also, each subsequent release of MacOS X won’t run on devices that are more than a few years old, or at best, renders software that’s more than a few releases old obsolete. The net effect is that Apple has quietly and incrementally created a new kind of “lock-in,” and worse, has become less pro-active in telling anyone about it. I’m concerned that my second-generation iPad will eventually follow this pattern as well.
It’s not that Apple hasn’t created lock-in situations before, but in the past, Apple has been much more open with its customers and partners than it is now. Some Apple history shows how.
In the early 1990s, Apple went from Motorola 68000-family microprocessor chips to Motorola/IBM PowerPC chips, which prompted developers and users to upgrade their software across the board or be left behind. I worked for an Apple software developer (Aldus, which was acquired by Adobe) in the 1990s and can attest that the changeover was well orchestrated. Apple did a good job selling this change as being a good thing.
In 2001, Apple released MacOS X (Mac OS Ten), a fundamental change to the Mac operating system. MacOS X was a consolidation of several technologies that were developed by Apple and NeXT (a Steve Jobs company that Mr. Jobs sold back to Apple) over the course of the 1990s. Again, Apple wisely built a bridge from old to new by maintaining a way for users to run earlier versions of MacOS for several years.
In 2006, Apple released its first Intel-based computers, replacing the Motorola/IBM PowerPC. Yet again, Apple bridged the old and the new; this time by providing PowerPC emulation on the Intel processor platform for several years, until 2010.
But sometime between then and now, it seems that something has changed within Apple, and it’s having a direct impact on users. I don’t like what I see, and I hope that the good ship Apple will make some course corrections.
Apple has become (on and off) the most valuable company in the world, and is hugely profitable. It has achieved this status in no small part through the loyalty of its customers, many of whom stuck with Apple through some painful times. I was an Apple dealer before some of the readers of this blog were alive – starting in 1981 – and I have owned Apple products since 1984.
I am of the opinion that Apple owes us something in return for this loyalty. By providing easy-to-use products that fit (and in some cases, have created) the modern digital lifestyle, Apple does go a long way to keep up its end of this bargain. But Apple has go the rest of the way – as it once did – by returning to its earlier and more consumer-friendly practices relating to software obsolescence, hardware accessibility, and environmentalism.
Apple can certainly afford to do so.
Here is the second of two articles about IBC 2012. At IBC this year, I was on the lookout at the intersection of TV software – which has always been my focus – and multi-screen delivery. Two product categories enable multi-screen services: service delivery platforms and video gateways. Some suppliers have entries in both. This article looks at offerings from Viaccess-Orca, Cisco (with NDS), Nagra, and Motorola.
Update, October 28, 2011: According to reliable sources contacted after this blog entry was posted, only Intel’s Digital Home Group (the Marketing team) was dissolved and reassigned. The Atom chips themselves are alive and well. In fact, the next-generation 51xx dual-core series are in the hands of outside developers, and the first new products based on them are coming in the CES 2012 time-frame.
(Original Post: October 13, 2011) It’s interesting and unfortunate that Intel seems to have (suddenly) exited the Atom STB processor business – The CE4100 ‘Sodaville’ and CE4200 ‘Groveland’ chips. You’da thought it was a healthy business, given the effort and expense Intel put into promoting it just last month at IBC. A sizable booth, and about a half-dozen commercial implementations on display – and if it’s true, this move likely left these implementations in an awkward position.
It’s strange timing, just as the platform was beginning to get some market traction. The Boxee Box uses it. Logitech and Sony built GoogleTV devices around it. Amino built its Freedom product line around it, including a custom–built an Atom-based box for Telecom Italia. Not to mention Comcast and DirecTV and their upcoming Atom-based set-tops. But these chips were much more expensive than other STB chips and never got to real volume as a result.
From the initial news reports, it has not been clear if Intel has stopped taking orders for the chips altogether, or has only ended proactive marketing for them. Intel’s apparent exit follows in the tracks of (a couple weeks ago) Intel pulling out of MeeGo, which is the environment that Intel had been pitching to STB co’s for these chips. Now MeeGo has been merged with Limo, to expand its scope and shift it toward HTML5 (not a bad thing, but disruptive for developers).
Just goes to prove my old theory. In the end, so many companies always revert to “safe” businesses when the chips are down (and that’s literally, in the case of the Atom line). For Intel, it’s always been about the chips – the money they put into vertical markets such as TV are tactical marketing programs, not strategic.
Then there’s Cisco, which buys S-A and later sells its Mexican STB factory to Foxconn. Nobody’s quite sure what the story with Cisco’s Videoscape is, but its lead executive resigned. Cisco always goes back to its core networking businesses.
Google and Google TV? The Google TV platform was also implemented on ARM-architecture chips, so that platform itself is not in jeopardy with Intel’s exit. But (without going into the tangent about what Google might have planned for the platform after the Motorola Mobility acquisition), Motorola’s IPTV set-tops are Broadcom and Sigma (MIPS architecture) based. So (correct me if I’m wrong), wouldn’t GoogleTV have to be ported to MIPS in order to run on these Motorola boxes, if it hasn’t been ported already? That could make it a long wait.
This morning, we were greeted with the announcement that Google – a company that built its business on top of the Internet, search and advertising – would be buying Motorola Mobility (MMI), the mobile smartphone, TV set-top box and home networking portion of Motorola that became a stand-alone company at the beginning of 2011.
There is little doubt as to the strategic and product-level advantages that this combination would give to both parties, should the acquisition be approved by shareholders and regulators. Strategically, it’s about intellectual property, as stated in Google’s afore-linked press release – with the un-said subtext that it will probably give pause to potential adversaries before becoming embroiled in the kinds of law suits that have gone back and forth between Apple and HTC, Apple and Samsung, and others.
Product-wise, in addition to the obvious synergies between Google (Android) and Motorola in the mobile smartphone (Droid) and tablet (Xoom) device categories, Motorola benefits by having an opportunity to make Google’s industry benchmark search technology native within all of its products. Search has been a long time focus of Motorola, on the TV infrastructure side. We’ll see over time whether or not this drives non-Motorola Android-based smartphone makers into the clutches of Microsoft Windows Phone.
Google potentially benefits in that MMI has the industry presence to help move Google’s Google TV technology from something of a pariah status within the TV industry into the industry mainstream. This would give Google TV a better opportunity to receive a broader test in the marketplace, through Tier-1 pay TV operators that buy from Motorola. With Motorola’s imprimatur, TV service providers might be more apt to test and adopt it (content owners willing). Conversely, if Google TV were to receive more of an industry blessing as a result, Motorola’s value proposition could be strengthened.
There are some “devil in the details” things that hopefully will be ironed out. For example, a Google-owned Motorola Mobility will have two IP television security solutions for conditional access and encryption: Google’s Widevine and Motorola’s SecureMedia. Will one of them “win”? My belief is that they could be complementary, and not an either-or situation, because Widevine shifted its focus to connected consumer electronics devices (e.g. smart TVs and other video-capable devices) a few years ago. Of course SecureMedia is going in the ‘multi-screen’ direction too, so we’ll see.
Another interesting area will be how the two companies leverage one anothers’ advertising technologies. MMI has an investment into Black Arrow, an advanced advertising specialist; and has an entire product line (Medios) devoted to the merchandizing of content on any screen.
It’s the cultural fit that’s less certain. Can the acquir-or handle the business that the acquir-ee brings? Will the acquir-ee bring some grown-up discipline to the acquir-or? In a way, I liken today’s Google to the Cisco of years past. Google’s acquisition binge of recent years resembles Cisco’s of 10-15 years ago. By its own admission, Cisco lost some of its focus in the process.
In retrospect, Cisco has been, and will remain, a network infrastructure provider (just as, at the end of the day, Intel will always be a chip company). Strategically, Cisco’s acquisition of one of Motorola’s biggest TV industry competitors – video infrastructure and set-top box supplier Scientific-Atlanta – a few years back made sense for Cisco, since video helps Cisco justify its network offerings. But culturally, Cisco has never truly become a “video” company, even with the company’s launch of Videoscape, which purports to unify large subcontinents of Cisco under a video solutions banner.
I ask myself: why did Cisco (S-A) lose its momentum in its video business, which has resulted in Cisco selling off a set-top factory, not to mention big layoffs, and not to mention Cisco’s abrupt shut-down of the once-hugely-popular Flip video business. Will the same thing happen to Motorola Mobility in a few years?
Or we can go off on another tangent and ask whether – by having bought its way into being Nokia’s primary smartphone OS supplier – Microsoft will have brought both Windows Phone and Nokia back from the brink – just as Android breathed new life into MMI’s mobile phones a couple of years back. Or, we can ask whether Apple feels in the slightest way threatened by any of this. Sequentially, too early to tell, and they’d never admit it if it did. But Google’s effect on Motorola Mobility, and vice versa, is not tangent to the conversation at all.