Will Alcatel regret its bet on Microsoft’s IPTV

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.