The acquisition will significantly bolster Netgear's position in the US broadband market - making it the leading vendor in terms of revenue generated from modem sales to ISPs, up from 3rd place in 2010. According to IHS Screen Digest data, Netgear and Westell combined represented over 20 per cent of revenue from modem sales to US ISPs, with over $200m in 2010. Top competitors are Pace (following its acquisition of 2Wire), Motorola and Actiontec. From an ISP perspective, the biggest buyers of modems in the US are AT&T and Verizon, together spending an estimated $579m in 2010.

Notwithstanding certain unspecified relationships, Netgear will take over relationships between Westell and several major ISPs in the US, including AT&T, Verizon, Cincinnati Bell, and FairPoint Communications according to IHS Screen Digest research. These will supplement partnerships Netgear already has with cable providers Comcast, Charter and Mediacom.

The deal marks a trend of consolidation in the consumer access equipment industry, following a series of acquisitions in the last two years, including:

• Pace's acquisition of 2wire and Bewan, both in 2010

• ADB's purchase of Pirelli's broadband access hardware unit in Q4 2010

• Motorola's sale of its European cable modem business to Compal in Q1 2010

• Sagem's acquisition of Gigaset Siemen's broadband and Wimax hardware business in Q3 2009

Fierce price competition and ensuing margin pressure has been behind much of this consolidation. A number of vendors are now looking to next-generation modems (DOCSIS 3.0, VDSL, FTTP) and to expanding product lines to include more sophisticated, multi-functional connected devices (e.g. pay-TV set-top boxes with integrated modems and VoIP capability, sold to multi-play operators) as a way of boosting per unit revenue.