Yankee Group Foresees 10 Million Networked Digital Homes By 2003

According to new research by the Yankee Group, nearly 10 million U.S. homes will be digitally remodeled with home networking in the next four years.

The Boston, Massachusetts-based research firm led a home-networking forum in Santa Clara, California this week, during which executives from Microsoft, Motorola, 3Com, Sony, Lucent and Sun Microsystems explained how the digital home is moving from a big idea to a big reality.

“Soon, familiar products like telephones, stereos and televisions will take on a whole new life,” said Yankee Group vice-president Boyd Peterson. “Today, this means consumers can access the Internet from anywhere in their homes.”

The big-name participants in the forum concur. “Last month’s retail introduction of our first home networking products marked the first time Ethernet products were developed exclusively for home use,” said Eric Benhamou, CEO of 3Com Corporation. “Serving as architects for the digital remodeling of American homes is one of our largest growth opportunities as a leading manufacturer of network solutions,” he added.

Home Connections Multiplying

In recent weeks, a number of international companies have begun to launch home products with Internet connectivity, and others have announced plans for digital home-connected products and appliances. For example, users can now reach the Internet through Sega’s Dreamcast video-game platform by using AT&T as the ISP.

Additionally, Sweden-based companies Ericsson and Electrolux are planning a series of kitchen appliances that will be able to go online through wireless communications. The two companies plan to connect the appliances through a wireless network.

The Consumer Is Ready

According to the Yankee Group’s 1999 Networked Home survey, consumers are ready for the digital home. The survey shows that more than 17 million U.S. households are already interested in home networking.

“The networked digital home is becoming a reality now because we finally have compelling applications, affordable, unobtrusive networking technology, and consumer demand,” said Peterson.

These consumer developments are not lost upon computer giant Microsoft. “Simple home networking solutions and new protocols that link devices within the home will be at the heart of a technology evolution for consumers,” said Craig Mundie, Microsoft’s senior vice president. “Home networks that run on existing wiring and new wireless links will connect many types of digital devices in the home, providing them with a wide range of multimedia content and services from the Internet.”

The Yankee Group’s research shows that 650,000 U.S. homes already have some form of networking installed. The company projects that the number will jump to 10 million by 2003, reflecting a compounded annual growth rate of 95 percent over the next four years.

About The Yankee Group

The Yankee Group is a subsidiary of Primark Corporation. The company offers IT research and advisory services, strategic planning assistance and technology forecasting.