UK consumers will need to be shown some compelling services before they go to the trouble and expense of networking their homes, according to market research firm Datamonitor.
The idea of a networked home where PCs, televisions, videos and audio systems are connected to each other and to the Internet is attractive, but in reality it is several years away for most people. Speaking at IIR's Home Networks European Congress in London recently, senior Datamonitor analyst Chris Tant warned that companies will have to emphasise the service benefits, rather than the sci-fi glamour, if they are to achieve decent market penetration.
"The demand for home networking technology and services is very small today, and is limited to technology enthusiasts with ADSL or multiple PCs," said Tant. "The problem is that there is a huge lack of awareness of the benefits of networking and broadband access."
Tant believes that there is evidence that the potential market for home networking kit and services will expand because of the rollout of broadband Internet access across Europe, the increasing number of homes with more than one PC, and the growth of the digital TV sector. "By 2005, over 60 percent of European households will have the potential to do home networking, through digital television, broadband access and/or owning more than one PC," Tant predicted.
With a home network a user could share an ADSL connection between several devices, giving them all a portion of the bandwidth. For example, a hi-fi system could download MP3 files from the Internet and a television could access video-on-demand services.
"Families provide the greatest potential market in the future, which is why it's crucial to emphasise the services not the technology. Broadband access is the most important aspect, but while gaming and digital music are both niche markets today they could both become very important," said Tant.
Cable operator ntl believes that the broadband market is already poised to boom. The company gives subscribers the opportunity to buy cable modems that will provide broadband access, and Guy Hirson, advanced technology manager for ntl, claims that the rollout is going well.
"Frankly, we can't get rid of them fast enough. We're turning over more than 1,000 a week, and the only reason we don't shift more is because we don't have enough engineers," Hirson said.
Cable modems can act as "residential gateways", through which content providers can supply services. Some industry figures believe the supply of such devices should be subsidised, as some companies already do with set-top boxes, in order to speed up the growth of the market. This isn't something ntl is considering, though. Its cable modem costs £140, or can be rented for £5 per month.
"There's no reason for us to subsidise these cable modems. Our customers are already falling over each other to buy them," said Hirson.
Hirson agrees that it is vital for companies to provide compelling services in the near future.
"Today the big driving force in buying residential gateways will be fast Internet access. Tomorrow it will be enhanced services that will generate additional revenue, such as VideoMusic on demand, content download and rental, Voice over IP, and interactive television services," Hirson predicted.
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