September 29, 2004

The future of home entertainment is up in the air. Quite literally. Linksys® is leading a revolution in home networking which promises to do away forever with cables and connectors - and replace them with wireless.

For 16 years, Linksys has been a leading provider of wireless, routers, network cards and USB (Universal Serial Bus) adapters for home and small business users, using retail and e-commerce channels.

But it is specifically in the area of household and small office/home office (SOHO) wireless networking that Linksys is grabbing most attention, thanks to the rise of wireless consumer applications worldwide.

A new report from In-Stat/MDR states that the continued need for broadband sharing and a growing interest in entertainment networking will drive the total value of equipment with a home networking connection of some type from US$8.3 billion in 2004 to US$17.1 billion by 2008.

And analyst firm Infonetics Research earlier this year placed Linksys hardware at number one in a wireless local area network (WLAN) equipment market expected to reach revenues of US$3 billion in 2007, from US$696.4 million in the first quarter of 2004.

(Cisco Systems®, which boasted its best quarter of WLAN sales to date in the three months to April 2004 following the launch of its Structured Wireless-Aware Network concept, came fourth.)

The Infonetics Research Wireless Lan Hardware report stated that there had been a 158 percent rise in WLAN switch port shipments worldwide in the first quarter of 2004, with revenue growth of 121 percent.

This double-digit quarterly growth was predicted to remain a feature of the market throughout 2004 and to continue on an annual basis up until 2007.

While much WLAN equipment is obviously for business use, Linksys's ranking at the top of the market indicates the extent to which consumers are adopting wireless, a trend which seems to go hand in hand with increasing household penetration of laptop computers and broadband.

A report last year by In-Stat/MDR expected home-user shipments of WiFi access points and network interface cards to grow to almost 44 million units in 2007, from 7.2 million in 2002.

The research company said "the increased embedding of WiFi into notebook PCs, with an increasing trend by home users to purchase more notebooks as opposed to desktop PCs" was a major factor in this rapid growth.

At the same time as the wireless PC is gradually becoming the norm at home, it is also being increasingly connected to other consumer electronics devices to form so-called home networks.

These began with users hooking up their stereo to their TV, for example, to improve the sound of movies (a trend with consumer electronics manufacturers soon exploited with the development of 'home cinema' widescreen TV and audio equipment bundles).

As more and more entertainment content is delivered digitally, however, the PC is rapidly becoming an integral part of the home network concept.

Digital video and audio files (usually downloaded over a broadband connection) are being streamed to TV sets or stereos on the home network, which will often contain other elements such as games consoles.

In Stat/MDR research into home networks found that one in 10 US households had one in 2002 (up from eight percent in 2001) and they could be found across all demographic groups.

The study uncovered that broadband was a major driver in the adoption of home networks, as owners cited shared Internet access as the primary benefit of household networking.

"Because home network owners are more likely to have broadband than the average household, they also have more to gain by networking their computers," noted the report's authors.

At the time, Ethernet cabling was the predominant method of connection, used in half the homes surveyed. But only 10 percent of respondents said they would use it in the future, compared to 31 percent preferring wireless.

The growth of wireless home networks has recently been given a further significant boost on two fronts.

In the area of standards, June 2003 saw the creation of the Digital Home Working Group (DHWG), a body committed to allowing seamless interoperability for household networked devices regardless of the mode of connection or the protocol used by each device.

The DHWG currently has 136 members, including Linksys and household consumer electronics and computing names such as Fujitsu, HP, IBM, Intel, Kenwood, Microsoft, Nokia, Panasonic and Sony.

The second major development was an explosion in technologies targeting the household network market, such as home gateways, networked personal video recorders and dedicated media servers.

These technologies are helping to hasten the convergence of personal computing and consumer electronics in home networks that can handle a wide range of audio, video and data applications, both in analog and (increasingly) digital format.

And, along with coaxial cable (specifically supporting the set of standards proposed by the Multimedia Over Coax Alliance, of which Cisco is a member), In Stat/MD considers wireless to be the most promising medium for connecting future home networks.

According to the research company, these will be used mainly by consumers for sharing broadband (cited by 64.6 percent of respondents), viewing pictures (43.9 percent), listening to music (42.1 percent), watching video (30.6 percent) and IP telephony (29 percent).

Elsewhere in the research, 51.7 percent of consumers said they were extremely or very interested in connecting a PC to a stereo system to listen to digital audio files; and 49.7 percent expressed similar interest in connecting a TV to a PC or a media server to watch video.

This diversity of applications points to a significant opportunity for service providers of all types.

Since home networking represents the fusion of computing with consumer electronics, content and services can be delivered equally by traditional audio-visual media companies, such as cable operators, or by Internet service providers (ISPs) - particularly those specializing in broadband.

This potential is being realized in the media and telecommunications industries with the rise of the 'triple-play' business model, where companies, regardless of what they started out as, now offer consumers a mix of video, Internet access and voice communications services.

Even mobile phone companies may potentially seize a slice of the home networking market, thanks to their growing predominance in public WLAN operations and wide brand acceptance among consumers.

Whichever service provider segment ultimately owns the home network market (and in practice it may be a range of different providers, based on content), the chances are they, and the consumer, will be relying heavily on Linksys equipment.

Linksys, founded in 1988, is the world leader in home and small/medium business networking, owning more than 30 percent of the retail store market and leading in networking sales through e-tailers.

Linksys has also become the fastest growing networking vendor in the distribution channel, which caters to small/medium businesses, corporate workgroups and enterprise environments through value-added retailers (VARs) and catalogs.

The company has more than 150 different products, available in more than 8,400 retail stores in the US, 1,100 internationally, and through more than 1,000 VARs and distribution partners.

Linksys has been recognized with top awards from PC Magazine, PC World, CRN and more.

It has also been named as an Inc. 500 Hall of Fame inductee for its five years of continuous growth and before its acquisition by Cisco last year had regularly won accolades for being one of the fastest growing private companies in the US.

The company has kept pace with advances in home networking through the launch of market-leading products such as the Linksys Wireless-B Media Link for Music (WML11B) and Wireless-B Music System (WMLS11B), which went on sale earlier this year.

The Linksys Wireless-B Media Link uses Wireless-B (802.11b) networking to send digital audio content such as MP3s (Moving Picture Experts Group Layer 3 audio files), WMAs (Windows Media Audio files) and play lists stored on a PC or other storage device to a home stereo.

Aside from music files, the Media Link offers access to hundreds of global Internet radio stations and support for music streaming services. Media Link comes standard with an Internet Radio Service, which offers more than 1,000 Internet stations.

The Linksys Wireless-B Media Link for Music is also interoperable with RealNetworks' award-winning Rhapsody® Internet jukebox service, allowing subscribers to browse their library by artist, album, or song title, and access the custom radio stations and play lists they have created.

In Europe, where home WiFi equipment shipments leapt from nine percent of the worldwide total in 2002 to 15 percent in 2003, according to In Stat/MDR, Tiscali, the region's largest independent ISP, has already started offering Linksys wireless equipment to its DSL Pro customers.

David Kelly, director of sales in EMEA (Europe, Middle East and Africa) for Linksys, says: "Tiscali's endorsement of Linksys products demonstrates the added value and benefits that networking hardware can bring to the SOHO user with a high-speed Internet connection."

Mike Edwards, general manager of Tiscali Business Services UK, adds: "Joining with Linksys fits closely within the Tiscali philosophy of aligning with the best-of-breed strategic partners.

"Linksys products ensure we can offer single and multi-user enterprises the most complete, reliable and cost effective business broadband solutions."

Jason Deign is a freelance journalist located in Barcelona, Spain.