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Report: Networking entertainment is in

Broadband access was the initial draw for home networking, but this year, network access to home entertainment will be the big driver, according to a new report.

Shared broadband access has driven demand for home networking so far--but this year, sharing entertainment will be the big lure, according to a new report.

In the report released Tuesday, research firm In-Stat/MDR says developments in home networking will not only make it easier for people to play and share their own digital music, video and other content, but will also encourage emerging applications such as online gaming.

More manufacturers are adding networking connectivity to their products, allowing electronics devices such as televisions or stereos to link to PCs via Ethernet or wireless. Sony, with its RoomLink system, and Hewlett-Packard, with its Digital Media Receiver, are among those companies that have already stepped into the market for "converged" networking.

"The emergence of converged network products is due to the acceptance of traditional home networking," said Mike Wolf, an analyst with Scottsdale, Ariz.-based In-Stat/MDR, in a statement.

The ability to share a broadband connection to the Internet over a home network has been the big draw for early adopters for the past three years, Wolf said. However, the market is growing and reaching into the mainstream, he said.

As the home networking industry begins to garner a larger audience with new products, its annual revenue will increase from $1.8 billion last year to $5.3 billion in 2007, the InStat/MDR report forecast. Sales connected with the networking of music, video and other media networking will make up 49 percent of total home networking revenue by the end of 2007. In 2002, media networking accounted for 6 percent.

Also aiding in the growth of the home networking market is the increasing adoption of broadband access and the falling cost of wireless networking chips, specifically 802.11b chips, Wolf said. Wi-Fi chips are as low as $8 to $9, which includes the Wi-Fi chip radios.

The number of home networks in North America, which will continue to be the world leader in home network installations, will grow from 9.2 million in 2002 to over 28 million in 2007. The most popular home networking device will be gaming consoles, and DVD players and digital video recorders will also be popular, according to the report.