TekPlus - 'Catholicism the Way Forward for Home Networks'

In order for home networks to significantly penetrate the market they must be catholic- to be all embracing. In addition, the use of home networks needs to be a 'no-brainer', plug and play. If we look at who uses the VCR it is generally the child who sets and programmes it, however VCR manufacturers have gone through a learning curve and their products are easier to install and use than they were five to ten years ago.There is reluctance amongst vendors to talk about the home networking market, however they are getting into alliances with each other and partnerships are being struck, they will role out products and solutions once the market shows its first true signs of life. The question for any company delivering any product or service to the home and the household is where do they fit into the home networking environment? Will they be able to capitalise on the new value chains being generated? And what will their role be in the marketplace?

Source: TekPlus

The home networking market will develop in three phases:

The first one will encompass the PC and a LAN, connecting a number of devices with conflict and collaboration between Bluetooth, 802.11 and Ethernet connectivity. Content delivered will be based around gaming and financial services through portals such as Yahoo. We expect the first phase of home network deployment to take place in the next 6 to 18 months.
The second phase will develop into 'smart' areas within the home, with the networking of smart appliances such as VCRs, TVs, fridges, Hi-Fis etc. Embedded processors will become a part of some white and brown goods. Content delivered will be personalised to the individual, so the home network will move into the 'personalised home network' with different communities of interest. We expect this phase to take place in 18 months to three years.
The third phase is the migration of these networks to create the 'intelligent home', where networks become part of the blueprint for new homes and begin to connect with security, fire alarms, climatic control and other home maintenance and environmental systems. The technology issues surrounding the PAN and LAN will be eradicated and a mix of 802.11, GPRS, Bluetooth, Ethernet and DECT will be in use. In addition, connection interference will be reduced and the reliability of networks will improve as a result. An expansion in the number of services available will also occur and maintenance and support will also become a feature of the market. Utilities companies will have a role to play in this third phase. We expect this phase to develop after 2005.

We are beginning to see the seeding of the market but it will take sometime for the market to bud and bloom. Companies that are waiting for a killer application to stimulate demand for home networking market will lose if they choose to wait, as they will build themselves a barrier to entry. We see the emergence of mini-killer applications rather than one killer application creating this market. Some mini-killer applications will be developed prior to the full emergence of home networks and others will be created as a result of the penetration of home networks in the market, with some applications being developed by the users.

Figure 1.3 Percentage Breakdown of The Intelligent Home Market, 2004

Kamini Umrania, lead consultant for the 'Intelligent Home' at TekPlus believes this impressive growth from devices is just the beginning and that after 2004, as the services and content develop, the growth will be even more pronounced. At that stage the market will be primed by emerging 'full home solution' players and 'Home Integrators.' Kamini states that the major opportunities for the home networking market include:

Deployment of broadband networks, funnelling new entertainment paths to the consumer market
Increasing number of household electronic goods need require interaction and connectivity
Plug and play ability of networking elements
Manufactures delivering cheaper networking solutions to the home environment

The home networking market will be hampered in many parts of Europe where the rollout of broadband connectivity has been slow and ineffective, such as the UK where BT continues to monopolise on its local loop ownership and control. In Germany the opposite is true and Deutsche Telekom has slashed DSL rental rates in order to ramp up penetration and kill off competition. The first market to experience high penetration of home networks is the Finland, being a front-runner in new technology acceptance, development and usage, as has been the case in the GSM market. In fact, Finland should become a hot bed for home networking development and we expect 'mini killer' applications for the European market to be seen first here, just like SMS. Home networking is expected to follow the broadband market quite closely and homes that have broadband connectivity will be spurred on to connect their homes, to fully benefit from a one-pipe solution delivering all communications and entertainment needs.

Figure 1.2 TekPlus’s Value Stack, The Intelligent Home (Source TekPlus)

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About TekPlus:

TekPlus is a strategy consultancy and analyst firm focused on providing solutions for business intelligence and strategic direction. TekPlus aims to provide vendors and end-user clients with innovative concepts, training, strategic consultancy, market intelligence and regular visionary guidance. Our focus is in the areas of Enterprise IT, Telecoms, IT Services, SME, Channels, etc and its application to the vertical industries. We focus in particular on the verticals of Healthcare, Finance, Utilities, Automation and Communications.

TekPlus website – http://www.tekplus.com

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PRESS RELEASE

'Catholicism the Way Forward for Home Networks'

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29th October 2001

Equipment Vendors and Service Providers Seek New Revenue Opportunities in the Expanding Home Networking Market

The European Home Networking market is identified as the next crucial segment to be targeted by vendors says TekPlus, a leading industry consultancy, which expects the market to grow by a compound annual growth rate (CAGR) of 74 percent, from $1.00 billion in 2001 to $5.33 billion in 2004. This growth is a result of an increasing number of devices for the home embedding a network element. The expansion of networking elements included in products such TVs, DVD players, fridges, microwaves and other household appliances will develop in addition to the more traditional network-able products such as PCs, printers, scanners, PDAs and external modems. The introduction of gateways, modems and wireless base stations will also stimulate growth in the market, where households chose to deploy LANs within the home.

Figure 1.1 Market Forecast of the Home Networking Market, (Source TekPlus)