The company announced today that it is teaming with a Southern California land developer and a small service provider to wire 13,000 new homes in Los Angeles with networking technology.
As reported earlier, today's deal is part of Cisco's strategy for the emerging market for home networking, where dozens of companies, including 3Com, Intel, Motorola and start-ups such as 2Wire, are fighting for a piece of the action. At stake is a market that is expected to grow from revenues of $600 million in 2000 to more than $5.7 billion by 2004, according to research firm Cahners In-Stat Group.
With high-speed Net connections becoming more widespread, technology firms believe consumers want all their electronic devices--PCs, stereos, kitchen appliances and security systems--to communicate and share an Internet connection. That way, homeowners can adjust the heat or air-conditioning in a room from a PC, watch a security-camera feed of their home over a Web browser, or distribute audio or video throughout the home.
At the heart of Cisco's strategy is a forthcoming new home appliance, called a "residential gateway," that allows consumers to connect electronic devices such as PCs, appliances and security systems with their phone service and high-speed Internet access. Cisco has also recently partnered with a slew of companies, including appliance manufacturer Whirlpool, which is making its appliances more intelligent. Refrigerators, for example, will include Web pads for Internet access.
Similarly to Home Director, a home-networking company spun off from IBM, Cisco's strategy is to strike deals with land developers, phone companies and cable operators, which will wire homes with high-speed Net access and home networks and offer a suite of new services, such as Net-based phone calls and movies and music over the Web. Cisco recently took a minority stake in Home Director.
Cisco executives today said they have partnered with Southern California land developer Playa Vista and local service provider PaeTec to network 13,000 homes and 6 million square feet of office space in West Los Angeles.
Through partnerships with service providers, Cisco executives say they also want to sell the residential gateway, available early next year, for installation into existing homes.
Michael Moone, group vice president of Cisco's consumer line of business, said the company's goal is to earn more than $1 billion in revenue in the home-networking market within two years.
"It will be a multibillion revenue market for Cisco, and it's our goal to be the fastest (Cisco unit) to reach $1 billion," said Moone, adding that the cable equipment business was previously the fastest, taking about three years to reach $1 billion.
To help its efforts, Cisco yesterday unveiled at its headquarters an "Internet home," a 1,700-square-foot model of a house that's fully networked, including test versions of Whirlpool's Internet-enabled refrigerators and ovens. For example, Whirlpool offers a wireless Web pad that lets a homeowner turn on the oven from any part of the house. In hopes of signing more deals, Cisco executives said they will give land developers tours of the Internet home.
Cisco's residential gateway, which will cost about $500, will support Ethernet, a popular networking standard, as well as wireless, phone-line and power-line connections, said Jared Headley, Cisco's consumer solutions manager. Phone-line networking allows PCs to network with one another simply by plugging them into phone jacks, while power-line networking allows PCs and other devices to communicate through electrical outlets.
The residential gateway will also offer security software, such as firewalls to prevent strangers from hacking into home networks, as well as antivirus software, Headley said. Wiring a home will cost $1,500 to $100,000, depending on the features a consumer orders, he said.