Add telecommunications to the mix. The explosive growth of Internet protocol-based TV has telecom equipment makers scrambling to provide service providers with everything they need to offer the new service.

LM Ericsson CEO Carl-Henric Svanberg, just to name one industry exec thumbing a ride on the bandwagon, abruptly went from proclaiming that the Swedish gearmaker had no need for acquisitions to aggressively buying its way into a major new market. Ericsson in February struck a $1.4 billion deal to pry Tandberg Television ASA, a maker of equipment that converts and delivers digital TV signals, from an agreement it had struck to be acquired by Arris Group Inc.

Why the turnabout? IPTV is one of the fastest-growing sectors in the telecom equipment realm, a lifeline for companies still struggling to recover from their tech boom excesses. In 2006, sales of IPTV gear generated $7 billion in revenue, a figure set to more than triple to $22.1 billion in five years, according to iSuppli Corp.

Yet equipment makers such as Ericsson, Motorola Inc. and Nortel Networks Corp. have a lot of ground to cover in this surging market, given telecoms' inexperience transmitting digital video. The pace of change leaves little time for internal development.

"There's more activity coming because it's difficult for telecoms to get these kinds of services running on a single network," says Jim Davis, senior analyst with the 451 Group. "Vendors have to strike acquisitions to put together end-to-end solutions."

Although IPTV is gaining traction as technology, as a business it remains embryonic. According to a recent survey by Accenture and the Economist Group, 60% of communications industry executives think that it could take as long as three years for IPTV to produce significant revenue.

"The challenge will be to harness the power of this new technology to create a new video experience that makes consumers and advertisers willing to pay more than they do today," said Dan Elron, managing director for Accenture's communications practice.

The acquisition climate for IPTV is naturally driven by the technology's longer-term promise. In the past 18 months, Ericsson has announced or closed eight transactions, many of them video related, worth a total of more than $6.4 billion. Motorola and Cisco also have been highly acquisitive.

Today, as consolidation accelerates, eyes are riveted on the remaining IPTV tech makers. One top acquisition candidate is publicly held Harmonic Inc., a broadband equipment company. With Tandberg being absorbed by Ericsson, Sunnyvale, Calif.-based Harmonic is the smallest maker of so-called video head-end equipment, which is critical to delivering IPTV. Either Harmonic starts filling out its portfolio with acquisitions of its own to supply the end-to-end IPTV needs of its customers, or it succumbs to a larger supplier.

Either way, the dealmaking frenzy isn't likely to abate soon.

See related chart: I want my IPTV