When most people think of having a digitally 'connected home' they conjure up images of living in a world created by the animators of the successful '60s cartoon The Jetsons.
Only a few years ago, the concept of having your PC and entertainment system all working in tandem on an integrated network that also controls many other functions inside your home would have been viewed by many consumers and business professionals as a pipedream.
These days, however, the connected home -- or the melding of traditional home electronics and IT products -- is fast becoming a reality.
Cisco-owned SOHO networking gear maker Linksys claims that the total SMB and consumer networking market will be worth around $100 million in Australia by year's end, driven predominantly by the mass market retail and reseller channels. Already, in the US, there are around 10 million homes with home networks.
The uptake of broadband services and wireless network product uptake in the SOHO market is also a good indicator of the market potential. Research conducted recently by Frost & Sullivan found that the combined base of subscribers for cable and DSL is expected to grow from 373,700 in 2002 to 900,600 in 2005, with the fastest yearly growth of 68.6 percent projected for 2003.
Earlier this year, Forrester Research predicted that by 2010 there will be more than 14 billion consumer devices capable of being networked, and 95 percent of these will be products other than computers. Home networking will be a US$12.5 billion market next year, according to research organisation Cahners In-Stat/MDR.
So far the numbers, while only small in comparison to the established enterprise IT market, tell a compelling story. Some would say the jury is still out about whether the connected home concept will change our daily lives. However, IT vendors are working towards providing products aimed squarely at making the home the 'digital hub'.
In mid 2003, Microsoft announced it was working with more than 30 new computer makers to supply Media Centre PCs -- specialty desktops designed to provide an integrated media and entertainment platform through the software giant's forthcoming Windows XP Media Center Edition operating system.
Microsoft and chip giant Intel have visions of all home computer users running an all-in-one PC, which is part TV tuner, part video game machine, part stereo, DVD player and digital photo archive -- all connected via high-speed broadband services. Not to mention other goodies such as plasma screens, video phones and digital cameras that can complete the connected home picture.
Vendors such as Hewlett-Packard and Acer Computer also have this year launched their versions of beefed-up multimedia PCs, while German-based entertainment and household electronics company MEDION hit the market in mid November with its 8080 XL Home Entertainment centre. The PC includes a multimedia software kit that lets users listen to music tracks and radio, and watch video clips, DVD movies and TV.
But with this in mind, is the home market the next frontier for resellers and service providers? If you talk to Peter Elderton, the owner of integrator Connectivity Solutions, the connected home concept is ready to explode and starts with providing the right back-end infrastructure to deliver the required services.
For the past two years, Elderton's fledgling company has struck deals with Australian property developers to wire up multi-dwelling residential units [MDUs] with cabling to deliver broadband and related home networking and home automation services. 'It's just the right time -- everyone wants it [but] they don't quite know what they want,' Elderton says.
According to researcher Frost & Sullivan, there are 1,399 apartment buildings in Australia (excluding Queensland) with more than 100 units each. This number will jump to around 1,480 by 2008.
Elderton's company has completed projects with developers in North Sydney, Rose Bay, Mona Vale and more recently at Northgate Apartments in Wollongong with property developer Ousley. The 156 apartments are used by students in Wollongong who are attending university in the city.
Elderton also claims to be in discussions with other property developers such as Lend Lease, Colliers and Mirvac. 'It's about to go nuts -- it won't just go slowly. When this thing goes off, everyone will have to have it,' he says.
At Northgate, the company has wired up an Ethernet backbone in the building and used D-Link networking gear in each apartment. Elderton has also launched another business called Home Xone, a residential ISP for MDUs. 'The real model that we are moving forward with is the model in Wollongong. We've done the cabling, done the system integration. The next thing is Home Xone goes in and becomes a supplier,' he says.
Connectivity Solutions has also partnered with Request DSL reseller Techex Communications. Techex is providing billing and wireless services under the agreement. 'We deliver the broadband out to these locations,' says Chris Collinge, managing director at Techex. We have relationships with the likes of Uecomm and PowerTel to get [the broadband running],' he says. He adds that the agreement with Connectivity is a way for the provider to get a foot in the residential broadband market.
Techex has an 80-strong reseller channel itself across Australia. 'Nobody else was as advanced [as Connectivity]. Nobody else was doing this to this scale,' he says.
Elderton says his focus is on niche markets, such as schools and aged care. 'Connectivity Solutions offers the systems integration and then we've got the rights to sell broadband and telephone and the reason that we can is because it's wired the way we want to wire it,' he says. 'Each bedroom has its own [broadband] connection. When the students move in, you plug into the wall and you build as you would in a hotspot environment,' he says. There are two hotspots in the building as well, he says.
Earlier potential deals with big property developer Meriton fell through, says Elderton. 'You can't go to every developer, they just don't want to pay,' he says. 'Unfortunately, you've got to find a niche developer,' he says.
According to Elderton, developers are not the only ones who are interested in the services. 'It's the after market, people that are property and strata managers. People that see they've got a collective community and they want to either possess more revenue from them or offer them a better service,' he says.
The company has also found another partner in a property developer, which Elderton declines to name, that has 2,000 apartments. 'They'll take it up and we'll have the rights to sell Home Xone,' he says.
As for the single home market, Elderton believes the opportunities are limited. 'Home Xone will be a residential ISP, broadband and voice supplier, says Elderton. 'But dealing with a family in the home, the amount of revenues you can glean [are low]. There's just not enough money in it. There's no profit in it,' he says. However, he says the Home Xone will have some residential ISP services for homes.
Elderton believes the single home market will wait until wireless cranks up. 'You go after the home through the kids. I looked seriously at a retail store. It needs to be a specialist retail store. We talked to Australian Geographic about their model and putting a Connectivity Solutions store in Westfields and marketing through the schools. Until someone embraces that -- it's not going to happen. People don't know what they're bu
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