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Home networking opens its doors for business

New players in home networking show that the market may be poised for serious growth, and technology firms are ramping up new ad campaigns to sell customers on the systems.

If you question whether home networking will ever catch on, consider this: A Texas-based gas and electric company plans to offer the nascent technology as a service for its 6 million customers.

Soon to be faced with increased competition in the wake of energy deregulation in the state, Houston-based Reliant Energy is exploring partnerships to expand its service offerings beyond gas and electric to cable and Internet access, phone service, and even home networking.

"We're in for an explosion for home networking," according to General Taylor Jr., an information technology team leader at Reliant Energy Communication Networks, who says the new offerings will help the company retain customers. "We want to bundle all the services into one utility bill."

Market research seems to back Reliant's strategy. At a Yankee Group home networking conference today, a newly available study suggested that the number of networked homes in the United States will mushroom from 650,000 in 1999 to 10 million by 2003.

For the past year, technology firms and telecommunications carriers have championed home networking as a lucrative market. Yet as companies such as utility firms--which aren't traditionally tied to networking technology--embrace the technology, the market may be poised for take off, according to Yankee Group analyst Karuna Uppal.

"That shows the broad-based appeal of the market," she said.

Yet for home networking technologies to truly succeed in the market, firms must convince consumers that the new technology can help them save time, make organizing activities more convenient, and can even entertain them, according to 3Com chief Eric Benhamou.

Emphasizing the entertainment value of the technology, as well as highlighting the ease at which PCs can be networked to use a single Internet connection, will help fuel growth in the nascent home networking market, technology firms said today.

3Com, Intel, and others are counting on home networking kit sales to skyrocket this Christmas season, and plan to launch large advertising campaigns to try and persuade consumers to buy their products, either as standalone kits or when bundled with new PCs.

The wireless and phoneline networking kits allow consumers to connect their PCs and peripherals together to share Internet access or play multiplayer games. With phoneline technology, users can network PCs by plugging them in phone jacks.

Dan Sweeney, general manager of Intel's home networking operation, said Internet sharing--the ability to have several PCs surf on the same Internet connection--is currently the primary driver of home networking. Early next year, high-speed Internet access modem manufacturers plan to include home networking technology in cable and digital subscriber line (DSL) modems.

Plugging in your home
The buzz at today's show was the distribution of audio and video within a home. In the music arena, consumer electronic firms and PC makers are building new appliances, called "music servers," that can store MP3 music, connect to a stereo system, and play tunes throughout a house, said Tony Zuccarino, Broadcom's senior director of business development.

Some companies plan to build speakers that can work with phoneline technology and can network with a music server, he said.

A Diamond Multimedia spokeswoman said the company is exploring several music server technologies for consumers.

Yankee Group's Uppal believes distributing entertainment throughout the home will be a serious draw for consumers interested in home networking technology. "Music servers are definitely going to happen, simply because you want to access music throughout the house. You can have your Abba music stored in your living room and listen to 'Dancing Queen' in your bedroom."

Similarly, a DVD player or video game system in one room could distribute a movie to the television in a bedroom, she said. Peracom Networks, for example, is building technology that allows homeowners to design personal TV channels for their own use, such as a movie from a DVD player.

Roy Johnson, vice president of business development for a start-up called 2Wire, said he expects that Internet telephony over DSL technology will also be a draw for consumers. In the future, he said, users will be able to immediately install multiple phone lines simply by calling a service provider.

"If you have people visiting you for a week, you can create a second phone line for them," he said.