News

Internet Home Alliance Says Home Networking is on the Rise and Reveals Sweet-Spot Opportunities for Home Technology Companies (27/1/2004)

Internet Home Alliance, the leading cross-industry network of companies advancing the home technology market, announced today the results of one of the most comprehensive research studies ever done on the connected home - a home where computers, televisions, lighting, HVAC and home security systems are linked to a centrally-controlled network. Following are the key findings from the report, entitled State of the Connected Home Market 2003.

Broadband Forecast

Internet Home Alliance estimates that about 57% (about 62.3 million) of US households have Internet access currently; 18% (nearly 20 million) of those households have broadband access. By mid 2004, the Alliance anticipates that about 26% of US households (about 28.4 million or 46% of households with Internet access currently) will have broadband access.

Home Networking Forecast

In percentage terms, home networking has been growing at a dramatic pace over the past few years. Internet Home Alliance estimates that about 12% (7.8 million) of single-family, owner-occupied households with Internet access have a home network, which is defined as a persistent connection between two or more computers or other digital appliances. The Alliance predicts that home network ownership will increase among this segment to about 16% (or about 10 million households) by the end of July 2004 for year-over-year growth of about 33%, which is slightly above the 25% growth from 2001 to 2002.

Interest in setting up a home network continues to be driven by decidedly mundane concerns about maximizing the potential of existing PCs. Most home network adopters will acquire utilitarian networks designed primarily for sharing an Internet connection, electronic files, hard drive space and/or a printer. The greatest barrier to home network adoption is a perceived lack of need or interest. Other barriers, including perceptions about high costs and complexity of set up and maintenance, have marginal consequences comparatively.

Ecosystems Framework and Findings

For the purposes of market analysis, the Alliance has adopted an ecosystem perspective on the connected home market. Dubbed the Ecosystems Framework, this tool is designed to help companies mitigate risk in this often confusing market and, on the flip side, identify the most promising opportunities. The Alliance intends for the Framework to serve as a common blueprint for industry players and, at the same time, establish a shared architectural language. This type of framework is necessary for fostering more collaboration among companies in this space for the ultimate benefit of consumers.

Within the Framework, the Alliance has identified three ecosystems - Family, Career and Entertainment - that correspond to discrete consumer needs and describe lifestyle domains common to the work of social scientists. Following are the key research findings within each of the three connected home ecosystems:

Family Ecosystem
Within the connected home, the family ecosystem refers to the ways in which family members interact with each other via technology in securing basic needs like food, clothing and shelter as well as in meeting higher order emotional needs. From helping families put nutritious meals on the table to streamlining household operations, technology offers families time savings, peace of mind and other critical benefits. Key research findings for the Family Ecosystem are:
* By a two-to-one margin, consumers would rather see home technology applications in this ecosystem than in the other two. However, this is the least developed of the three ecosystems in terms of infrastructure and available products and, therefore, represents a considerable market opportunity.
* The most pressing unmet consumer needs addressed by products and services within this ecosystem concern health and fitness, household routines, home operations (systems) and family management, notably, personal communications and scheduling.
* About 15% of consumers have a strong interest in home automation, specifically HVAC, outdoor lighting, indoor lighting and pool functions.
* Nineteen percent of consumers have a strong interest in using technology to streamline routine household tasks including paying bills, cleaning, vacuuming, drying clothes, washing clothes and washing dishes.
* Those most interested in Family Ecosystem technology applications are women, 25-44, with children living at home in households with incomes of $75,000 or more.

Career Ecosystem
This ecosystem refers to the people, environments and technologies that enhance career productivity and potential. What consumers want most in this area is technology that helps them strike a balance between work and family life. Key research findings for the Career Ecosystem are:
* The top-ranked consumer needs within this ecosystem include productivity, business communications, career education and commuting.
* Most consumers who use a PC at work, on average, at least 15% of their workday (60%), report that they don't work outside regular business hours at all while the remaining 40% report taking work home at least one day per week. However, of that group, most (71%) don't use an Internet-related technology or tools to facilitate the completion of work at home.
* About 15% of consumers have a strong interest in improving work productivity at home and 11% percent of consumers are interested in improving work productivity while traveling.

Entertainment Ecosystem
This ecosystem refers to the technology and content designed to address consumer needs for audio, video and game-related entertainment. In this context, entertainment is defined as purposeful leisure as opposed to less directed activities like talking with friends. It is in this ecosystem that the interests of primary and mass market consumers most often coincide and market entrants are likely to encounter the greatest short-term successes. Key findings for the Entertainment Ecosystem are:
* About 33% of consumers have a strong interest in media entertainment. Interestingly, primary market consumers are significantly more likely than their mass market counterparts to have a strong interest in all forms of media entertainment, indicating that an interest in media entertainment is a prime driver or, at least, highly correlated with early adopter behavior.
* Two-parent households are significantly more likely than other household types to have a strong interest in media entertainment for the home.

Popular Internet-Related Behaviors

The Alliance also researched the most popular Internet-related activities among single-family, owner-occupied households with Internet access; they are:
* Researching a product or service (92%)
* Purchasing a product or service (84%)
* Sending digital photos as email attachments (60%)
* Communicating with family, friends and/or co-workers via Instant Messaging (57%) * Paying bills (48%)
* Checking utility account information (47%)
* Printing digital photos (44%)
* Listening to Internet radio stations (43%)
* Uploading digital photos to a Web site for family or friends to view (29%)
* Downloading a streaming audio file (28%)
* Watching TV and surfing the Web at the same time (28%)
* Playing movies on a home computer's DVD drive (28%)
* Burning music from the Internet to a CD (21%)
* Downloading streaming video files (19%)
* Downloading music from a file-sharing program like Kazaa (19%)

As might be expected, the most popular activities are related to e-commerce and personal communications and the most popular entertainment activities involve digital music and photos.

"The results of this comprehensive study of the connected home market suggest a variety of untapped opportunities, particularly in the Family Ecosystem," said Tim Woods, vice president, Ecosystems Development, Internet Home Alliance. "For the foreseeable future, we anticipate that the market will consist of two functional networks in the home: a PC-centric network and a consumer electronics-centric network. There won't be a high demand for bridging these networks until the foundation for each of the three ecosystems has been laid. This means there is substantial opportunity for market entrants to develop Family Ecosystem point products that allow consumers to migrate to an increasingly integrated network environment."

www.internethomealliance.com