What is driving and enabling the Networked Home? This question is common among homebuyers who don’t want their new home to become obsolete before they sell and move out (or even before they move in). Builders also ask it, since they don’t want to add new features until customers demand them. And companies that make the products, services, and technologies want to understand the market opportunities, leverage points, alliances and risks. Although the question is simple enough to ask, the answer can be complex, since it is surrounded by a collection of market, social and technology trends.
This is the second of three articles that examine key trends enabling and driving the development of the Networked Home. The first article covered Science and Technology Trends while this one discusses Market and Consumer Trends. The final installment will address Social and Demographic Trends. As always, your comments and suggestions are encouraged.
The home networking market is in the Early Adopter stage and has yet to “cross the chasm” into mainstream markets, which require total solutions and safe decisions. Today’s home networking visionaries want to gain a dominant market position by the time we cross over and the market explodes. While these early adopters are willing to do much of the work in pulling the various pieces together, the pragmatic Early Majority wants a totally integrated solution that requires no such effort and comes with references by peers who already use the same solution.
The following collection of Market and Consumer trends will help shape the home networking market and the timing of its mainstream debut.
1. Information Economy â€“ As the world evolves from a set of industrial economies with factory workers to one based on information and knowledge workers, we gain the ability to work from home. So, many new homes now have home offices and the wiring infrastructure to support broadband communications.
2. Economies Going Global â€“ Armed with personal computers and Internet access, individuals can now create, market, sell, and distribute goods worldwide and thus compete with large enterprises. While the challenge of 24-hour / 7-day operations and the need to support multiple currencies tends to favor large, multi-national corporations; smaller companies and individuals can be more nimble, and technology can address the operational logistics. As a result, the slower Old Guard companies are threatened.
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3. New Business Models â€“ The Internet lets start-up companies challenge traditional thinking (in banking, commerce, books, music, TV, etc.). It also facilitates new business models and value chains to support disruptive technologies. An example is video-on-demand services, since they disrupt the value chain of broadcast television and will effect home wiring needs.
We’re familiar with television that is broadcast to a targeted demographic of viewers. First we had terrestrial broadcast with analog VHF and UHF signals received by an antenna for free and based on an advertising business model. Then came fee-based cable and satellite TV services that extended the broadcast model with better quality and more choices. Now the FCC’s allocation of digital TV spectrum will soon allow most of us to receive more terrestrial channels with standard- and high-definition quality that rivals both cable and satellite, and it’s free. These developments, however, are all extensions of the advertising based broadcast TV business model. Video-on-demand introduces new models and value chains.
Video-on-demand is a disruptive technology that lets us find and access millions of videos just when we want to view them, with the ability to pause or rewind. Examples range from pay-per-view television to more narrowly focused interests, such as the University of Wisconsin Hockey Game (which I may watch at any time in Austin without a satellite dish) and the 1998 Toyota Cienna Automatic Transmission repair video.
Video-on-demand will offer more choices of content than satellite, which “only” broadcasts about 300 channels that must be received at a specific time. And while satellite service requires the installation of quad-shielded RG-6 coaxial cable between the dish antenna and each TV decoder box, in order to carry those 300 channels; video-on-demand occupies just a single channel, which can soon be distributed on a wireless home network. At this year’s COMDEX computer show, the HomeRF Working Group and UniView demonstrated this concept.
4. Improved Delivery Logistics â€“ Many products are moving from physical formats to digital and can be sent electronically. Examples include computer software and digital music. And new services (e.g. Peapod and Streamline) now efficiently deliver physical items such as food to the busy, disabled or elderly. As a result of these improvements in delivery logistics, the whole structure of the community will change.
When both parents work and food is delivered during the day, keeping it secure and at the right temperature is a challenge. Some of the solutions today involve specially insulated containers, but we can also imagine homes with secure external access for deliveries and even refrigerators on outside walls with front and rear doors.
5. Mobility â€“ The combination of two high-growth markets â€“ the Internet and mobile phones (along with two-way pagers, and handheld computers with wireless Net access) â€“ results in mobile e-commerce (or m-commerce). Because analysts expect 1 billion mobile phones by 2004 with most having data and Internet capabilities, m-commerce will be a huge market with implications for home networks.
The same federal government rules that require 911 emergency calls to identify their location will also encourage the support of location and proximity sensing. With landline calls, the calling telephone number is location-specific, but with mobile phones it is person specific, and that person may roam around. So, mobile phones will include an integrated GPS system and compass that can be used to point at a store to find out its Internet URL and then learn what items are on sale.
Over time, expect personal phone numbers to dominate over location phone numbers. Some people are already disconnecting their local phone service in favor of using cellular phones, but it’s too early to guess how this will affect home wiring.
The wiring in most homes only supports two phone lines, and that’s clearly not enough for today’s busy families with home offices and teenagers. HomeRF wireless home networking, with support for four phone lines today (and eight lines in 2001) could replace the need for any phone wires, and Bluetooth could also play a role since this wireless standard will be in most of the 1 billion mobile phones.
6. Mass Customization â€“ The growing knowledge base of individual consumers enables companies to mine this data for a greater understanding of individual preferences and thus serve “markets of one.” Consumers are just starting to get used to, but will eventually expect, personalized products and services. This trend can be extrapolated into customized homes that replace specs and will affect the future of site-built and manufactured homes.
7. Privacy and Security â€“ The Internet has made us acutely aware of privacy and security concerns, including personal, financial & health information, IP & content protection, hackers, personal safety, spamming and more. These are the top issues standing in the way of more rapid growth of e-commerce, so it’s imperative that home products, networks and gateways address them.
The latest in biometrics technologies can be applied to office, home and mobile products and are especially critical to mobile products. It’s common that our home PC contains all of the passwords for services we access, thus saving us from the burden of maintaining and entering multiple passwords. Because our home is physically secure, we seldom worry about the risk, but this practice is more dangerous with mobile devices that can be easily misplaced or stolen, such as notebook PCs and cellular phones. Because phone access to Internet services focus on high value financial and travel transactions, the loss of a phone and its stored passwords can be quite costly, so biometrics offers a sensible solution to this security problem
8. Shorter Development Cycles â€“ Today’s competitive environment requires quick customer feedback and fast-to-market development that meets individual wants and needs. This requirement is attracting developers to rapid prototyping and soft user interfaces. As a result, consumer electronics and home appliances are starting to use touch displays instead of a complex array of knobs, buttons and switches. This adds design flexibility and the ability to add refinements and new functions later.
9. Obsolescence â€“ Today’s rapid technology pace makes products obsolete quickly, and replacements are expensive. This obsolescence fills our landfills and causes us to constantly relearn. It’s one of the reasons that the information appliance business model, where new functions are provided by remote services, is gaining popularity over to the PC model, where functions must be installed locally.
10. Complexity â€“ Life itself is more complex today, and so are the products we use. We have too many IDs & passwords, and there’s a real need to simplify if these products are to be accepted by mass markets. The same goes for home networking, an early adopter market that has many hurdles to address before crossing the chasm into the early majority. One of these hurdles is the integration of a total home system solution that eliminates the need for individuals to piece various parts together.
It’s my belief that the automotive industry will lead the way to home networking, with automotive telematics integrated and made easy to use by the manufacturer. The automotive world will thus educate consumers on technologies that can be applied to homes once a systems integrator pulls it all together. That systems integrator can be a homebuilder, custom installer, or after-market specialist.
11. Short Attention Spans â€“ Technology innovation and the shortened development cycles enable instant gratification and the resulting short attention spans of consumers. That means that vendors have little time to interest consumers and must address perceived needs with compelling value. Alternatively, they can offer Convenience, Comfort & Fun â€“ all key benefits for busy consumers.
12. Remote Monitoring and Diagnostics â€“ will extend the life of both people and products. Biosensors with remote monitoring will let seniors live longer in their own homes and avoid the need for extended health care in nursing homes. Similarly, security monitoring protects life and property.
Smart appliances will also use remote monitoring and diagnostics â€“ to improve their life and lower operational costs. The Maytag repairman, for example, will know what part needs replacing before he even shows up at the door, and he may be able to show up before the appliance completely fails.
These monitoring applications need various home networking infrastructures. People, because they are mobile, will depend on wireless networks. Appliances, because they are neither mobile nor near a network port, will depend on power-line networks.
13. Adaptive Systems â€“ Eventually, homes will monitor, predict and adjust to stimuli, human activities, and environmental conditions. Arrays of sensors will feed home agents that learn habits, preferences, and lifestyles, thus acting on our behalf as personal concierges. These agents will give vendors a significant competitive barrier because the personal knowledge, which has been accumulated over a long time, will be difficult to replace.
14. Personalized Interfaces and Surroundings â€“ The modern home (with its lighting, temperature, music, etc.) will adapt as occupants age, roam or shift between tasks. As our eyes begin to fail, device interfaces will adjust. As our memory fails, our homes will remind us of medication schedules and where we left our keys.