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Microsoft networking investments may boost nascent technology

Recent investments by Microsoft could jumpstart a networking technology many skeptics claim won't work: connecting electronic devices to the Net through electrical outlets.

    Recent investments by Microsoft could jumpstart a networking technology many skeptics have said won't work: connecting electronic devices to the Net through electrical outlets.

    Microsoft yesterday took an equity stake in Israel-based Itran Communications, a privately held firm that manufactures networking products for powerline technology.

    Powerline networking hardware allows data, video, voice and audio to travel over electrical lines at high speeds. Similar to PCs that plug into a phone jack to dial into the Internet, hardware that is configured for powerline connections simply has to be plugged into an electrical outlet to share files or other information.

    A handful of powerline companies--including Adaptive Networks, Enikia and Inari--are racing to be first to make a mark in the nascent market. For good reason, too. A recent Cahners In-Stat Group study found that the home networking market is expected to grow to $1.4 billion in sales by 2003.

    Microsoft is dabbling in a number of home networking projects. The Redmond, Wash.-based software giant sells cobranded networking kits with 3Com, and is working on developing Universal Plug and Play, a protocol that will allow consumer electronic devices to automatically recognize each other.

    Microsoft's investment in Itran is pegged to its plans to network all future Internet appliances, the company said.

    The company is eyeing Itran's "home automation" networking technology, which lets homeowners control lights, heaters or alarm systems from a single device. Looking ahead, Microsoft envisions including the technology in toasters, refrigerators or other home appliances. Its Universal Plug and Play will then help the appliances recognize and network with each other, the company said.

    Granted, Microsoft isn't the only firm interested in the nascent networking technology. Last month, graphics chipmaker S3, owner of Diamond Multimedia, sunk money into start-up Intellon.

    Both Itran and Intellon are at the forefront of powerline home networking technology, an idea that not so long ago was thought of as the stuff of science fiction. Companies have marketed visions of users turning on the dishwasher from their bedroom PC, or controlling home entertainment systems with a touch of a button.

    "They finally show that powerline is a reality," Yankee Group analyst Karuna Uppal said. "People are demonstrating it and are lining up powerful partners, whereas six to eight months ago, people were saying they didn't think it's going to happen."

    Intellon this week announced it has developed prototypes of powerline home networking kits that run at speeds of 11 megabits per second (mbps). By year's end, the company hopes to start shipping initial home networking kits that will let PCs network with other PCs through the electrical outlets.

    Dan Sweeney, general manager of Intel's home networking operation, said the technology will soon be reliable enough, but doesn't expect products to hit the store shelves until early 2001. "A lot of these vendors have made great progress, but they still have some technical challenges ahead," he said.

    Intel, like other networking kit makers such as 3Com and Diamond Multimedia, is looking to license powerline technology in the future to increase its arsenal of home networking products.

    Like its competitors, Intel has released phoneline kits that allow PCs and peripherals to connect to each other by plugging them into phone jacks, and they will shortly release wireless kits.

    The initial powerline kits will network PCs together. But in the future, devices such as washing machines and toasters will have embedded chips that will allow them to communicate with other devices once they are plugged into electrical outlets.