Motorola 2006 Annual Report Download - page 19

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DVR'') applications, as well as from spending by telephone companies upgrading their networks and adding video
services.
Our Strategy
The Connected Home Solutions segment is focused on becoming the global leader in broadband connected
home solutions and services, enabling customers to be seamlessly informed, connected and entertained. Key
elements in the segment's strategy include: (i) providing for convergence of services and applications across delivery
platforms within the home and across mobile applications, (ii) innovating and enhancing our end-to-end network
portfolio, and (iii) developing new services that leverage our platforms.
We are focused on accelerating the rate of digital penetration by broadband operators in North America
through the introduction of an enhanced suite of digital set-top boxes. Our product offerings include more cost-
effective products designed to increase the number of set-top boxes per household, as well as higher-end products
for advanced services, including supporting the growing HD/DVR markets. During 2006, we shipped our
50 millionth digital entertainment device for broadband cable networks, approximately 10 years after shipment of
our first such device.
We are capitalizing upon the introduction of IPTV by telecommunication operators to their subscribers with
products that support delivery of video content using both copper-outside-plant and fiber-to-the-premises (""FTTP'')
networks. During the year, the segment provided end-to-end video equipment and FTTP access network equipment
for the launch of Verizon's FiOS service and is supplying IP interactive set-top boxes to leading telecommunication
companies around the world, including AT&T, Telefonica S.A., KPN International, Lyse Energi AS, and ViaSat, Inc.
We are expanding our position in end-to-end video networks as well as increasing our offerings to wireline
carriers through several strategic acquisitions. During 2006, we acquired Kreatel Communications AB to enhance
our portfolio of IPTV set-top boxes and software and extend our customer relationships with leading IPTV
providers in Europe. We grew our presence in the video core network through the acquisitions of: (i) Broadbus
Technologies, Inc., a leading supplier of content-on-demand technologies, also called video on demand (""VOD''),
and (ii) Vertasent LLC, a software developer for managing technology elements for switched digital video
networks. In February 2007, we completed the acquisition of Netopia, Inc. (""Netopia''), a leading provider of data
gateways and subscriber equipment management technology. We also announced our intention to acquire Tut
Systems, Inc. (""Tut Systems''), a leading developer of edge routing and video encoders. Together, Netopia and Tut
Systems will enhance our position with global carriers as they deploy advanced services. We expect these
acquisitions to: (i) enhance our capability to provide complete solutions to cable television operators as they grow
their on-demand content offerings and deploy switched digital video (""SDV'') technology, which delivers
programming only when and where requested by subscribers versus delivering programming to all subscribers all the
time, and (ii) provide end-to-end video solutions to telephone companies as they add video to their service
offerings.
We are focused on enhancing and expanding our voice and data offerings to offer end-to-end solutions for
fixed-mobile convergence and next-generation converged IP-based voice, data and video delivery. These solutions
include: (i) stand-alone and integrated voice/data/WiFi gateways with support for handing off a mobile voice or
data call to a WiFi access point and a carrier's VoIP network, and (ii) next-generation infrastructure products in
the cable modem termination system (""CMTS'') and fiber optic network markets which expand the bandwidth
delivered to a home or business. We introduced our first seamless mobility voice gateway in 2006, which enables
our customers to support handoff of voice traffic between wireline networks and wireless networks using dual
mode handsets.
We also continue to focus on growing our business in regions outside of North America, including the
development of digital video products compliant with technology required in these regions. During 2006, the
segment launched digital video in Argentina with Cablevision; launched video on demand in the Netherlands with
UPC; and provided video set-top boxes to a number of operators in China. Although sales in North America
accounted for 83% of the segment's sales in 2006, shipments to markets outside North America have grown over
60% the last three years.