In a move that surprised no one, Scientific Atlanta and Microsoft announced yesterday they will team up on IPTV set-tops, combining Microsoft’s operating software with SA’s set-top.

The alliance had been expected, said TeleChoice President Daniel Briere, ever since SBC Communications announced it had chosen SA along with Motorola to provide its IPTV set-tops. Microsoft and Motorola already have a similar arrangement. SBC is likely to have insisted that SA work with Microsoft, its announced IPTV software choice.

“There are not exclusive deals,” Briere commented. “It’s not that Scientific Atlanta will abandon all of its own or other third party operating systems to do this. But the economy of scale and size of the customer base that SBC is offering up is going to make this a massive project within SA.”

Though expected, the announcement is further bad news for smaller companies, hoping the crack the set-top box market, he added.

“The big guys are winning this race,” Briere said. “The big guys are playing with big guys to do big things. Right now, if you want to play in the set-top box space, you have to play with Motorola and SA.”