ARRIS announced yesterday its agreement to purchase Digeo, a company known for its Moxi digital video recorders (DVRs), for a “cash purchase price of approximately $20 million.”

Microsoft co-founder Paul Allen founded Digeo in 1999. Steve Perlman, founder of WebTV, launched Moxi in 2000. The two companies merged in 2002, with Digeo at the time working closely with Motorola on what was then called a broadband media center (BMC).

The deal expands ARRIS’s reach in the customer premises equipment (CPE) and consumer electronics space.

Admittedly not a consumer brand, ARRIS is nonetheless in many more homes than ten-year-old Digeo, which targeted a relatively small market segment with its high-end Moxi DVRs. “Nearly 500,000 shipped to date,” Digeo CEO Greg Gudorf said in a conference call this morning.

In January 2009, ARRIS announced that it had shipped 20 million embedded multimedia terminal adapters (eMTAs) worldwide.

According to Digeo, it has delivered Moxi products to eight cable operators, including Comcast and Time Warner Cable. In May 2008, Charter Communications, also financially backed by Paul Allen, agreed to deploy the Moxi 3012 HD-DVR. In October 2008, Bend Broadband announced its plan to do the same.

One goal of this deal is bring Digeo’s products and intellectual property into more homes.  “(This acquisition) will lead to a broader adoption of the concepts developed by the Digeo team,” Bruce McLelland, ARRIS president, broadband communications systems.

“We plan to continue to market these (Digeo) products,” McClelland said. “These technologies will also be combined with ARRIS voice and data gateways.”

After failing to launch a retail product in early 2008 as planned, Digeo picked up the pace with its October release of the 3012 HD-DVR for the cable industry, the January 2009 unveiling at CES of a consumer-ready HD-DVR, and the August 2009 introduction of the smaller multi-room Moxi Mate.

The industry’s interest in video gateways dovetails with the shift toward IP-centric CE-devices . (For more on gateways, click here; for more on a cable perspective of IPTV click here.)

Digeo has long positioned their Moxi boxes as hubs of home entertainment that bridge the gap between the television and Internet worlds. Gudorf said ARRIS shared that vision.

“ARRIS really gets the power of IP in the network,” he said.

The acquisition brings into ARRIS’s portfolio a Kirkland, Washington-based facility and 75 employees. It raises the company’s research and development investment by $3 million per quarter, increasing the company’s total by 10 percent.

In his presentation, McClelland said ARRIS invests $110 million in R&D annually. “We look forward to expanding our investment,” he said.

In early September, ARRIS announced its acquisition of certain assets of video encoding-systems vendor EGT for $6.5 million. (For announcement, click here.)

—Jonathan Tombes

The Daily

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