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July 02, 2007

IPTV Middleware Provider Espial Helping Telcos Lower TV Costs

By Spencer D. Chin, TMCnet Web Editor

It’s no secret that cable companies are in a heated race to unveil triple-play service bundles combining telephone, television, and Internet services – forcing telecom companies to play catch up as their venture into satellite-based services has so far been limited.
 
However, according to an article in the June 27 issue of the Ottawa Business Journal, telco providers may have a powerful ally in the Espial Group Inc., a growing Ottawa-based company whose IPTV (News - Alert) middleware that is paving the way for telco companies to deliver interactive television through existing DSL lines.
 
The article discusses Espial’s (News - Alert) pioneering role in developing innovative software used to develop interactive TV services as well as deliver those services. It also briefly mentions Espial’s recent IPO, an important milestone in the company’s quest to generate funds to expand the breadth of depth of its middleware offerings.
 
“We're now in an environment with hundreds of channels (with cable and satellite television), and then you have our technology which enables a YouTube (News - Alert)-like environment with millions of channels," Espial's vice-president of marketing Brian Mahony. "The technology could also make it possible for you to chat on your instant messenger while watching Canadian Idol."
 
In the article, Mahoney discusses Espial’s key products, including Evo Client which offers features such as video on demand, electronic TV guides and Internet browsers for television, and the Evo Server, which provides service providers an architecture to deliver, manage and sell those services. Espial also makes the IPTV applications which sit on the Evo Client platform, the article noted.
 
Earlier this year, Evo Server surpassed 1 million customers.
 
Mahoney was quoted as saying that Espial’s current revenue is split almost evenly between Europe, Asia and North America, although its European revenues are slightly larger.
 
Espial’s recently completed IPO raised $26.9 million through the sale of roughly 4.1 million shares. The company's share price soared by as much as 13.7 per cent above its $7 opening price on its first day of trading, before closing at $7.85, according to the article.
 
In the article, Mahoney said Espial would use the monies raised in the IPO to invest in research and development as well as sales and marketing. He hinted that the company plans to grow in a managed way, though did not provide specifics on issues such as hiring activity.
 
Analysts note that Espial’s strong performance is indicative of the company’s potential to go it alone in a booming market. A study by ABI research noted that the client middleware market in 2006 was worth $38.4 million and is expected to grow to $75.1 million by 2011.
 
"Espial gets high marks particularly for innovation," said analyst Stan Schatt of ABI. He added Espial faces strong growth prospects, particularly in Asia Pacific where service providers are very cost-conscious.
 
Mahony was quoted as saying the value of the company's product is its ability to simplify the IPTV experience, since service providers must now deal with applying Internet rules to the television viewing experience and manage thousands of channels, games, instant messengers and so on, while catering to subscribers who desiring more variety but not complexity.
 
"Subscribers want more choices but less clicks to get there; they don't want to have to go through complex mechanisms (to find the right channel or movie). We make it so that Grandma can use IPTV as easily as Gen-Y," he said in the article.
 
Espial’s versatile IPTV middleware uses an open architecture which the company believes circumvents the systems integration issues of more proprietary approaches. According to Espial, Evo has been ported to over 20 different set-top box platforms – something not lost upon industry observers.
 
Analyst Jon Arnold of J Arnold & Associates was quoted as saying that Espial is one of the few remaining independent middleware vendors left, with some small rivals having been acquired by industry giant such as Microsoft (News - Alert) or Siemens.
 
"Espial is now a very attractive acquisition target because larger vendors may want to get the missing pieces of IPTV technology in-house. But because it is independent, its technology can also be used in various IPTV platforms which need middleware, making its customer base much broader," Arnold explained in the article. "Espial's IPO is a statement that it believes it can make it as an independent company... It's a lot easier to be acquired so they wouldn't go through with the process unless they were confident they had a sustainable business."
 
Another analyst, Dittberner Associates research director of broadband James Heath, was quoted as saying that Espial seems to be in "pretty good shape" as it has a very good product that can be easily customized by service providers, is highly efficient in terms of processing power, and is cost effective.
 
Spencer Chin is a contributing editor for TMCnet. To see more of his articles, please visit his columnist page.
 
 
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