Windows XP: A boon for home-networking market?

The company's forthcoming Windows operating system will support a technology standard known as Wi-Fi, or 802.11b, a wireless protocol that allows people to connect their computers and laptops so they can share the same Net connection. That way, people can roam through the house and still surf the Web or check e-mail.

"It's huge anytime Microsoft endorses a protocol or a service like home networking because they basically legitimize it," said Ross Fujimoto, strategic program analyst at Linksys, which makes home-networking kits.

For years, technology companies have touted the virtues of home networking, through which people might do everything from starting their ovens via the Net to downloading movies on demand. So far, the smattering of consumers who have created home networks have done so for more routine tasks, such as connecting PCs so they can share the same Net connection, files, printers and other peripherals.

Although the federal courts could still delay XP's planned release in October--and Microsoft doesn't yet have a strong track record with networking technology--analysts and technology executives say Microsoft's promotion of Wi-Fi in XP could educate consumers and spur interest in the hyped but still emerging market for home networking.

"It's the first time Microsoft will come out and push the benefits of home networking," Cahners In-Stat Group analyst Mike Wolf said. "Microsoft is trying to hold on to their relevance and take control of the digital home. And to do that they have to control the connection of devices."

For Microsoft, new built-in networking features in XP could help the software giant in its quest to become the heart of the networked home, where every PC, handheld and consumer-electronic device, such as TVs and stereos, is linked to the Internet.

For PC makers, such as the newly combining Hewlett-Packard and Compaq Computer, Microsoft's new operating system could breathe new life into PC sales. They're touting the appeal of connected PCs in the home, where people can use the same Net connection, play multiplayer video games, share music files and hold videoconferences.

Not quite critical mass
Sales of home-networking products reached $290 million in 2000, a 97 percent jump from the previous year. The market is expected to more than double to $585 million this year, according to Cahners.

Despite these figures, the market hasn't progressed as fast as technology companies had hoped. So far, 6.5 million, or 6 percent, of all U.S. households have home networks, according to Cahners. Of those without home networks, 13 percent of U.S. households are interested in building a home network, the researcher found.

The slow adoption rate has forced some of home networking's biggest boosters, such as Cisco Systems and 3Com, to delay the release of new high-end home appliances, called "gateways," which serve as the central devices in a home, connecting PCs, consumer-electronic devices and home security systems to the Net.

Microsoft wants that central device to be a PC, with every other device in the home connected to it.

The popularity of wireless connections, first introduced to corporations and schools, has spread to coffee shops such as Starbucks and to airports. With prices of Wi-Fi products dropping in the past year, wireless connections are catching on in homes. In the past few years, Apple Computer and PC makers, such as Dell Computer and IBM, have built in wireless networking technology into their computers and laptops.

"A lot of people who have played with XP say they will upgrade to it just because of the 802.11 support we've got built in there," Microsoft Chairman Bill Gates said during this summer's financial analyst meeting at the company's headquarters. "I do think 802.11 is very, very important to a lot of our scenarios, and it's actually the one connectivity thing where the progress this year has been far beyond what we would have expected."

While some less tech-savvy people have complained that it's difficult to install a home network, software in Microsoft's XP makes the setup easy, Gates said.

"In the home environment, we need to get 802.11 to be pervasive. It's still a little harder to set up, (but) Windows XP is a huge advance there," he said. "What you will be able to do is project from your PC or any of your PCs onto inexpensive speakers or screens and see any of the information that comes off of the PC, whether it's a playlist, a Web site, calendar, photos--whatever you want."

Easier to connect
The wireless support singled out by Gates is just one of the many home-networking technologies built into XP.

The new operating system--set to be released Oct. 25--will also feature improved support for Universal Plug and Play (UPnP), Microsoft-backed software that allows devices such as computers, printers and other consumer-electronics peripherals to automatically discover each other and communicate. New home-networking features include improved tutorials that will help people to easily build a home network and "firewall" security that will protect home networks from hackers.

Microsoft, however, isn't shutting out network equipment makers and has partnered with many companies, including gateway device makers, the company said.

For example, Linksys, Intel, NetGear and others sell wireless devices that can be plugged to desktop computers and wireless PCs or laptops that have built-in radio transmitters and receivers. The network equipment makers, along with PC makers such as Gateway and Sony, also sell low-end gateways that wirelessly connect the PCs and laptops to a high-speed Net connection.

With UPnP built into XP, the low-end gateway products can automatically find each other and communicate without consumers having to configure their computers, Microsoft executives say. UPnP will make it a lot easier for people in the house to do videoconferencing or play multiplayer video games.

Barry Bonder, Intel's director of home-networking products, said a PC would serve as a good central home-network device, but a gateway is better because it's always on. If a PC serves as the heart of the home network, that PC will always have to be on for other PCs in the house to use the same Net connection, he said.

Microsoft's support for Wi-Fi could give the popular technology the boost it needs to become the de facto standard. The wireless market had been set to settle on Wi-Fi in corporate markets and HomeRF for the home. But many agree that HomeRF--backed by Proxim, Motorola and Compaq Computer--has been a dismal failure. Intel, once a key proponent of it, bailed on the lagging equipment recently.

"Microsoft has done significant features that didn't exist before," Bonder said. Another important feature is that XP allows people to create different wireless profiles for the home and office that save the network hookup preferences for each site. That way, employees with laptops can easily connect to the corporate network at work, then connect to the network at home after the workday.

Analysts say Microsoft's support could end the disarray of wireless standards that has tended to confuse consumers and stop them from buying wireless-networking technology in the first place.

Parks Associates analyst Kurt Scherf said Microsoft's efforts with XP will make home networking, particularly wireless networks, easy to set up, which will help make the notion of the connected home more mainstream.

"Home networks have been incredibly difficult to set up and have appealed to the propellerheads," he said. "The big benefit (of Microsoft's product) is it's easy to set up. The good news is that word of mouth will spread to potential buyers of home networks that it's not hard."