Motorola to Acquire Tut Systems

21 DEC 2006

Motorola, Inc. and Tut Systems, Inc. announced that they have signed a merger agreement, under which Motorola will acquire all of the outstanding shares of Tut Systems for approximately $39 million. Tut Systems provides carrier-class end-to-end digital video encoding, processing and distribution products including MPEG-2 and MPEG-4 AVC video compression, local ad insertion, forward error correction, and real-time conditioning of video and audio. Today, more than 160 service providers worldwide deliver IPTV using Tut Systems digital video distribution technology.

Acquiring Tut will make Motorola the market leader in IPTV encoders, which complements its position as the market leader in IPTV set-top boxes. Tut's customers include the small, independent U.S. telcos as well as many smaller telcos internationally. Tut has had an partnership where Huawei has brought Tut's systems into IPTV deployments in Asia (outside of China) and in the Russian Federation.

It is not clear that Tut's customer base is a good fit to Motorola, which has previously sold its encoding systems to large cable companies. It also does not give Motorola into the large IPTV accounts that are typically served by Tandberg and Harmonic today.

It will be interesting to see how Motorola is able to take advantage of this acquisition.