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| EMagazine Volume 4 Issue 4 August 1999 |
Features
Interviews
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| Home Toys Article - August99 - [HTI Home Page] |
Read All About It News Announcements - Updated Hourly [Click Message To Learn More] |
The big money in the home networking market will be in the RG market. Home LAN connectivity in the form of kits will find their share of success, but true wide spread deployment of home networking connectivity will be when this technology is embedded in devices around the home. |
Michael Wolf is an Industry Analyst for Cahners In-Stat’s Voice and Data Group. His new report, "Residential Gateways: The Heart of the Home Network" was published in July. He can be reached at mikew@instat.com . Visit Cahners In-Stat Group’s web site at www.instat.com |
The latest "hot" home networking topic is the residential gateway (RG). With the number one reason to install a home network among consumers being shared Internet access, its no wonder. But sharing Internet access is just the beginning. Service providers are looking for ways to deliver new integrated services to the end user and an intelligent device such as a RG at the edge of the network is needed to enable the delivery of all these great new services.
A big part of this push towards offering integrated services was the Telecommunications deregulation act of 1996. Those service providing traditional phone service providers (usually referred to as Incumbent Local Exchange Carriers, or ILECs) can now offer Internet and video services, as well as new value added services such as security, remote energy monitoring to name a few. Those service providers which may have provided cable or long distance service now have the opportunity to offer voice or data service. In order to do this over the same pipe will require a CPE device that has the intelligence to manage the competing demands for content among the different nodes in the Home LAN and then distribute this content. This device is the RG. The price of the RG will be part of the cost of entry into this new market.
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Cisco, the world’s largest networking vendor, has been courting AT&T and Sprint in the RG market, as has General Instrument, the world’s largest set-top box OEM. Arris Interactive, a joint venture between Nortel Networks and ANTEC, has a deal to sell $100 million of its Cornerstone product to AT&T. Telecom infrastructure powerhouse Ericsson has created a whole new division forged around selling its E-Box, a PC architecture RG. Startups like 2Wire, Next Level Communications and Sharegate are making noise about new and different RGs, priming themselves for potential acquisition. With the RG market opportunity growing from basically nothing today to potentially over $8 billion by 2003 in an aggressive market scenario, more OEMs can be expected to enter this potentially lucrative market.
Big Money
The big money in the home networking market will be in the RG market. Home LAN connectivity in the form of kits will find their share of success, but true wide spread deployment of home networking connectivity will be when this technology is embedded in devices around the home. VCRs, home appliances, web pads, smart phones; they are all worth more interconnected than as standalone products. What allows access to these devices from the external network? The Residential Gateway
The evolution of the RG market will move from what are basically PCs hooked up to some form of dial up or digital modem to products that:
- Incorporate the routing/hubbing in the device and are not reliant upon a PC
- Are broadband, always on
- Are durable (carriers like the sound of 10 year life spans. Mention this to an equipment OEM and see if they can control their maniacal laughter)
- Enable the delivery of integrated services to the home
Cahners In-Stat Group believes that the RG market represents a potentially enormous opportunity for equipment OEMs. We expect that this market will develop rapidly as the push for integrated services and the deployment of high speed Internet access continues.
