Hardware makers have many gadgets in place, service providers are able to offer compelling packages that include home monitoring, digital cable, video-on-demand and wireless phone service, and high-speed Internet is becoming standard for many.
But the entertainment center of most homes, the television, is for the majority of people disconnected from the computer, where they store their digital content. The question is: when will the PC and the TV easily interact, beyond what a handful of consumer products like the Slingbox and Apple TV allow gadget buffs to accomplish?
"It will be a while," said Josh Martin, an analyst at The Yankee Group. "We're not quite there. Until we can effectively stream video around the house...consumers aren't interested."
The idea of a fully connected home seems to be catching on with consumers: the top growth areas in consumer electronics ownership in the last year are digital-video recorders, home network routers, MP3 players, cable modems and digital cameras, according to the Consumer Electronics Association.
The CEA estimates that nearly a quarter of U.S. homes have a digital-video recorder. Each is an important element to the digital universe that gadget makers, PC companies, service providers and networking alliances are striving to create.
More importantly, broadband adoption is creeping up: 35 percent of U.S. households have a high-speed Internet connection, according to IDC. And by 2010, adoption is expected to reach 60 percent. High-speed connections, of course, are critical for distribution high-definition video around a home.
But there are various issues standing in the way of that long dreamed-of day when the computer talks to the TV and the TiVo. To start, there's the tricky, or DRM. "Unfortunately, with copy protection issues, a lot of manufacturers are somewhat loath to get involved in that arena because they're worried they could get sued," said Steve Koenig, of the CEA.
Another problem is that consumer electronics companies' interest in connecting the entire digital home puzzle themselves. A company like Sony makes high-definition televisions, digital projectors, portable music players, cameras, game units, laptops and set-top boxes. It's more of a comprehensive approach to the living room. Apple takes the same tack, and all content purchased from its iTunes Store is made to be played on Apple iPods and its Apple TV set-top box.
For most computer companies not named Apple, partnerships are standard. HP, for example, has made its foray into the living room with networked TVs and media servers, but HP executives say they know full well that they can't build someone's whole.
"Nobody can do it all alone anymore. The (product) cycles are too fast," said Brian Burch, HP's Managed Home director.
But there's a catch-22 in all this standards talk: many consumers like that proverbial out-of-the-box setup, and building consumer electronics along interoperability standards in the same manner as computers doesn't necessarily give people that easy setup.
Where's the video?
Video is the centerpiece of the connected-home experience. Problem is, your average movie buff would say there's a dearth of high-quality video content online. As a result, there aren't many devices available for moving that content from the PC to the TV.
"Consumers have a decent amount of digital content stored now, mostly photos, not as many videos," said Yankee's Martin. "(But) all of this is about the TV. Not enough consumers have enough video to justify streaming."
That's starting to change. Several consumer-oriented companies are beginning to make affordable devices that, since most people would prefer to watch TV on the couch, not sitting in front of a computer.
from the iTunes Store to a TV, Sling Media has a product called the to the TV screen, and Netgear's digital entertainer can access content from YouTube on a TV.
Netgear's product is the result of a deal reached individually with YouTube. Not every hardware maker has the ability or the time to manage a series of one-off agreements with content providers, according to Martin.
It's still very early in the game for these kinds of devices. And so far, it's been a classic chicken-and-egg issue, Martin said. "The content is not really there because you can't watch it on your TV," he said. "At the same time, the devices aren't there because the content is not there."
The hardware available from Netgear, Sling and Apple are the exception, not the rule. It's still somewhat difficult to navigate most Web content on the TV. Apple TV makes it easier, said Martin, but the content available is only from Apple's iTunes Store, and you can't move it around to any device you want.
"There has to be another source (for video content on the TV), but Veoh (Networks), CinemaNow, Movielink, haven't really captured the consumer mind," he said.
Despite advances that have been made, the digital home is still in the tech enthusiast's domain. Today's purchasers of media servers and watchers of Web content from the comfort of their couch are the equivalent of those who, 20 years ago, were building PCs in their garages, Koenig said.
Until then, the digital living room is still a few years off. "It's not going to happen overnight," he said. "But we've taken baby steps. Some natural things we have to work out first before we can move forward in a meaningful way."