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Industry Standard

Home networking to surge 600 percent by 2003

February 4, 1999
Web posted at: 4:37 p.m. EST (2137 GMT)

by Douglas F. Gray

BOSTON (IDG) -- The home networking market will grow more than 600 percent in the U.S. by 2003, according to a report issued by Cahners In-Stat Group.

This forecast is probably good news for Bell Atlantic and IBM, which have announced that they have joined forces to supply home networking systems in the telco's coverage area.

About 21 million U.S. households will have multiple PCs in 1999, and 12 percent of those households will have some sort of home network installed, according to the report, titled "Home Networking: Markets, Technologies and Vendors."

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At this rate, the market will be worth $1.4 billion by 2003, the report said.

Home networking growth will not just come from homes with multiple PCs. The number of single PC homes with some kind of network will grow from less than 1 percent in 1999 to 9 percent in 2003, according to the report. In homes with a single PC, the network would involve appliances like the television and set top boxes, the report said.

"The majority of home networks will continue to be multiple PC homes for the next two to three years," said Mike Wolf, industry analyst for Cahners In-Stat Group.

The report states that Internet usage and the desire to distribute its content throughout the home is the primary driver for the boost in home networking. Other reasons include an increasing number of multiple PC homes, the growing home office market, and the push by consumer electronics manufacturers looking to increase revenue opportunities.

The growth in home networking will create new financial opportunities for multiple industries, including networking vendors, Personal Computer original equipment manufacturers (OEMs), and consumer electronics manufacturers, according to the report.

Bell Atlantic and IBM announced a partnership which calls for Bell Altantic to install and support IBM's Home Director home networking systems throughout the northeastern U.S. The two companies envision consumers in the near future moving into new homes pre-wired with home networking technology.

"Bell Atlantic has been somewhat of a leader as far as being a service provider for this," Wolf said.

But it still may be a while before many people can afford pre-wired houses, according to Wolf.

"Depending on the bells and whistles, it could cost anywhere from [an additional] $2,500 to $25,000." Wolf said. "In the new home environment, the prices will probably drop eventually, but there is always a market for very expensive homes."

But if companies such as IBM want to get into rewiring previously built homes, "the price will definitely have to come down," he added.

Ideally, homes equipped by BACCSI and IBM will be able to network PCs, distribute the signal from one DVD player or VCR to any television, and share an Internet signal, among other things, the companies said.

Douglas F. Gray writes for the IDG News Service in Boston.

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