Set-top box and consumer premise equipment maker Pace has acquired IT infrastructure maker Aurora Networks in a deal worth $310m. Aurora manufactures equipment for cable operators and ISP including headend equipment and fibre equipment. Pace announced that Aurora had revenues of $217m last financial year, with 15 per cent margins.
The acquisition of Aurora follows on a measured path that, in retrospect, Pace first embarked upon when acquiring 2Wire in 2010. The 2Wire acquisition symbolized for Pace a step away from being a provider of solely pay TV customer premise equipment to an interest in the more end-to-end solutions provider for both broadband and pay TV. The acquisition was prescient as the broadcast video and IP markets started to converge. The success of IPTV throughout the world had many service providers and equipment vendors scrutinizing the converged opportunity that the two spheres of influence could create. This view seemed bolstered by the simultaneous acquisition of Pirelli Broadband by Advanced Digital Broadcast Group, and indeed these two announcements were exactly one day apart in October of that year.
This would follow a general industry trend of consumer premise equipment (CPE) manufacturers diversifying their holdings to include both software and broadband CPE offerings. Pace followed by launching the Elements Software Platform in August 2011, nearly a year after announcing the 2Wire acquisition. This offered some clarity into Pace's interest in the converged services business, as the software was offered on both the pay TV and the broadband platforms. And, indeed, Pace were hardly alone in their quest to pursue software as a differentiating offering. ADB, Technicolor, Sagemcom, and Netgem have all announced similar commitments to software solutions as part of their portfolio, offering agnostic software offerings that further sought to increase consumer user experience while at the same time increasing their opportunity to the market.
This most recent announcement would seem to indicate a strategy by Pace to invest in the entire broadband ecosystem, enabling a strategy that is increasingly being realized by other video equipment and infrastructure manufacturers such as ARRIS and Cisco. By looking to offer solutions from the headend to CPE to software upon CPE, this investment by Pace would also be an endorsement of commitment to fiber technology, as Aurora Networks offers headend, GPON, and ONT products.
More importantly, this seems to highlight that in the industry as a whole, the convergence of offerings and service, infrastructure and software, is all becoming more and more real. As the prevalence of OTT, IP video, and the mobility of content throughout the home network are realized, the solutions necessary for network infrastructure, last mile technology, broadband CPE, and STB technology have all come closer and closer together as to be nearly inseparable any longer.