But in the battle to capture consumers, analysts say these powerline companies are far behind two other aspiring home networking technologies: telephone and wireless.
These firms also have a particular technology hurdle--they need to figure out how to block the noise and interference that comes with sending data over powerlines. The main problem, analysts say, is a lack of standards.
"Right now, powerline's got the least attention because there's no standards push behind it. They need a standard before it takes off. That's what spurred phoneline. People just ran with it," said analyst Michael Wolf, of Cahners In-Stat, referring to the Home Phoneline Networking Alliance, a group of more than 30 companies, including 3Com, Compaq, Intel, and IBM.
Yet the companies say powerline problems are not insurmountable, especially since home networking--connecting every consumer device and appliance within a home--is not expected to take off until next year, when high-speed Internet access from cable and DSL is more available.
Powerline does have one major benefit. While most homes have only two or three telephone jacks to plug in their PCs, there's at least one power outlet in every room. Additionally, the technology will be cheaper than wireless, said Stuart Wagonfeld, Adaptive Networks' director of sales and marketing.
The powerline companies--who have thus far worked as independent companies--acknowledge they have to establish a standard sometime this year.
Analysts believe the networked home of the future will feature a mix of the three networking technologies. The phoneline alliance is already working with HomeRF, a wireless standards group made up of 70 companies including including Microsoft and Motorola to make sure their technologies work together seamlessly. The powerline companies run the risk of being left out, Wolf said.
Bob Dillon, a vice president and co-founder of Enikia, says there's three options for powerline companies to reach a standard. Companies can simply compete, sign up partners, and then hope to become the de facto standard, or they can create an alliance or standards organization, much like the HomePNA or HomeRF. The third option is to enlist an existing standards group, possibly the HomePNA, help shepherd a powerline standard.
"We could take one of the existing bodies, expand their charter, and make it a cross-medium standard," he said.
Cyrus Namazi, president and chair of HomePNA, said there is potential for the HomePNA to become an umbrella organization for home networking technologies, but no meaningful discussions have yet to take place.
"It would be good ultimately," he said. "But there's pros and cons. The con is it might actually take away from the focus we've put on phoneline. The pro is there would be more synergy for the total solutions that are being developed."
Wolf believes that U.S. home networking market will reach $230 million by 1999 and grow to $1.4 billion by 2003. Over the next five years, phoneline companies should capture between 50 to 70 percent of market revenue, wireless will garner about a third, while powerline will have less than 10 percent.
Powerline technology may find its strongest role in home automation--for example, a computer could control the lights and security system in a home, Wolf noted.
Diamond Multimedia has already released a home networking product and many others, including Intel and 3Com, expect to release their first-generation products early this year--technology that reaches speeds of up to 1 mbps. Proxim has released its wireless technology and others will soon follow suit.
So far, Intelogis is the first powerline company to ship a product. Its Passport technology runs at 350 kbps, and the company plans to ship a 2 mbps product by the end of the year. Intellon, whose technology is licensed by Microsoft, as well as Enikia and Adaptive Networks, are working on 10 mbps technology and hope to ship products by the second half of the year. Ten mbps speed is important because it can handle video downloads.
"It's a nasty environment," said Enikia's Dillon, referring to noise on the powerline. "But we think we'll be successful."
Analysts, however, say they will remain skeptical until the powerline companies can demonstrate the products can work at high-speeds.
"Until they get the big players behind them, I have my doubts," Wolf said. "The window of opportunity is still open. It's a young industry and will take a while to mature."