Intel sees huge market in home networks

PC chip giant Intel Corp. (INTC) believes it has the answer to home users' needs and the key to opening up what it estimates will become a $1 billion market in five years:

Home networking.

"Home networking and small business connectivity are huge opportunities," said Craig Barrett, Intel's president and chief operating officer, at the company's Networking Symposium here Tuesday.

If he's right, it could mean hot sales for Intel's networking unit in the near future. Currently, about a third of U.S. PC sales are to the home market, but less than 1 percent of those PCs are networked, said Mark Christensen, vice president of Intel's small business and networking group.

And whereas some might see an empty glass, Intel sees an opportunity to sell water.

"Every PC in the world is a connected device or will be soon," said Christensen, who also heads up Intel's new Home Networking Operation, which was announced on Tuesday. The chip giant estimates that 300 million networked PCs will be in use by the year 2000, and more than 1 billion by 2005.

Yet, before the company can sell the home user on the promise of networking, Intel has to put its weight behind a technology.

Whatever it picks "[has] to be super simple and use the installed wiring," said John Armstrong, an analyst at market researcher Dataquest.

To achieve this, Intel has three basic options:

Use wireless networks, leverage existing phone lines, or send data via power lines.

Of the three, the power-line network seems most promising, and is in pilot testing in Great Britain.

Another challenge for Intel: Selling consumers on the need to set up a network in their homes.

Still, if Intel doesn't start now, a market can't develop, said Tim Bajarin, president of Creative Strategies International Inc., in Santa Clara, Calif.

"From Intel's standpoint, if you are not putting a stake in the ground and not in a position to drive a standard, the adoption of the technology will come later, rather than sooner," Bajarin said.

If Intel succeeds, it will own the way people shuffle data around the house.

"Tomorrow's user could have digital access devices in various rooms of the house," said Bajarin. "In the end, this could become several devices hooked up to a central computer-the home server."