Reshma Kapadia
NEW YORK: Big Internet media firms are revving up plans to let families share
music and surf the Web on different devices simultaneously, but with one Web
connection. However, so far consumers have not been clamoring for the home
networks.
Internet service providers such as AOL Time Warner Inc. and EarthLink Inc.
are gearing up for home networking, but analysts say such services won't take
off until more consumers have high-speed, or broadband Internet access.
"Only four percent of online households have said they are likely to shop
for home networking gear so it's hardly something people are clamoring
for," said Jupiter Media Metrix analyst Dylan Brooks. "The biggest
challenge is overcoming consumer reluctance."
That reluctance led to the early demise of Audrey, the kitchen-countertop
Internet device from 3Com Corp. The company pulled the plug on Audrey last week
after it failed to generate any substantial consumer interest. Nevertheless,
companies including AOL Time Warner and Earthlink are hoping to jump-start the
market as Internet service providers face a soft advertising market and slower
growth for dial-up Web access.
Atlanta-based EarthLink is expected to unveil a new home networking service
this spring. AOL Time Warner also plans to build on its pact with personal
computer maker Gateway Inc. and their ‘touchpad,’ which lets users access
Web services through a device other than a PC this summer.
Getting in early
The big companies see home-networking as a way to get a foot in the door with
high-speed, or broadband, Internet services that will later pay off with
higher-cost offerings such as interactive TV and digital music delivery.
"Home networking really goes part and parcel with broadband," Brooks
said. "The major hook for broadband in terms of applications has to be
beyond using the computer to get on to the Web faster."
For now, home networking means sharing the Internet connection with others in
the home and perhaps sharing a printer. "That is initially the primary
reason (people) are buying it, although EarthLink sees home networking in
general as a real opportunity to offer value-added services," said John
Ellis, director of broadband products at EarthLink, adding that the company
starting looking at the market mid-last year.
"Some of the early work and announcements (for the touchpad) was to be
used in a shared environment so you are going to see more roll out of that as it
goes golden this summer," said newly appointed AOL president of product
strategy Peter Ashkin. "But really it's about broadband because home
networking, even if it is here today, is not compelling without the broadband
aspect. We will sense the first glimpses of it in the summer," he added.
Broadband holds the key
The number of homes with more than one PC is quickly growing along with the
desire to be able to share one printer or one connection for the PCs, helping to
set the stage for home networking. "While it's true, historically, that
there have not been a lot of people who have bought home networks, I think with
the evolution of broadband and the fact that so many households are out there
with multiple PCs, we will see it take off," EarthLink's Ellis said.
Dial-up access has reached a level of maturity in the United States, with
every three out of five people in the country having access to the Web at either
home or work, according to Nielsen/Net Ratings. By 2003, Jupiter expects about
23 percent of online consumers will be accessing the Web through a high-speed
connection and revenue from the high-speed access will comprise about half of
the total $12.1 billion Web access.
"Broadband penetration today is still relatively small, but we are
seeing huge growth there. We are rolling out DSL in a significant way and trying
to make sure that once you have connections we are able to provide you with
other things like the network aspect of it so that more users are able to use
the same connection simultaneously," Ashkin said.
AOL Time Warner said offering high-speed access over cable lines is a high
priority, but the company is in wait mode on several initiatives, including ways
to leverage some of Time Warner's content assets in the high-speed environment.
"There are a number of other hurdles we have to go through before that
happens," Ashkin said.
As a condition to approving the merger of AOL and Time Warner, US regulators
said the combined entity had to sign up some of AOL's rivals before it could
deliver AOL's high-speed services over Time Warner's cable pipeline.
Types of home networking and devices
Among the challenges keeping home networking from blossoming into the next
sector is the lack of devices that have generated interest. Some early devices
include Netpliance Inc.'s iOpener and Compaq Computer Corp.'s handheld iPAQ
pocket PC. "There is a lot of hype about Internet devices and they are all
collapsing because people really do like PCs. There is a warm, fuzzy factor that
goes along with the PC and you know you are not cutting yourself off from
(doing) something," said Meta Group vice president Steve Kelynhans.
"If these appliances didn't cost so much, people might get over it, but
that isn't the case - at least for the next two to three years," Kelynhans
said. Nevertheless, Kelynhans said companies have to dip their toes into the
water because now is the time to establish their name and take control over the
direction of the market.
"The market's growth is going to be a slow burn. It's not something that
explodes into fire. It will smolder and build. I think it will become
increasingly and incrementally important each quarter for the next two to three
years," Kelynhans said. "Where (the market) really flips over is the
day consumer electronics manufacturers start embedding networking capabilities
in stereos, DVDs, CD players and TV."
(C) Reuters Limited 2001.