(Associated Press via NewsEdge) Ericsson's plan to buy Redback Networks for $2.1 billion is a sign of how the popularity of Internet video is expected to drive demand for broadband network upgrades.
Analysts said the acquisition also plugs a key hole in Ericsson's product line as the company girds itself for an increasingly fierce battle with rivals Cisco Systems, Alcatel-Lucent and Juniper Networks.
Network equipment makers are locked in a tooth-and-nail fight to provide the gear that enables service providers to offer greater bandwidth on their networks and faster and cheaper downloads of data, voice and video products.
One key area of growth is expected to be IPTV, or Internet Protocol television, a form of digital television typically delivered over broadband. Such connections also support high-speed Web surfing and telephone service.
San Jose-based Redback makes 'edge' routers, a crucial piece of technology for enabling those high-level functions.
'Redback's got a very good product, it's pretty broadly deployed, and if you believe that the day of IPTV is coming, which a lot of people do, they're sitting in a very strategic position,' said Zeus Kerravala, a network infrastructure analyst with Yankee Group.
Stockholm-based Ericsson is the world's largest maker of mobile phone networking equipment, and analysts said the combination will help the company sell to an increasingly consolidated customer base of telecom companies.
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