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Richard Shim

Staff Writer, CNET

The home networking boomlet has paid off for Larry Stone.

The Oakland, Calif., Web designer’s expertise with wireless technology has scored him brownie points with his father-in-law, better results at work and even a steady supply of free beer from his neighbor. Despite the rewards, however, he wonders whether home networking is still more hype than reality.

“The promise of it is encouraging, but many of the parts aren’t in place,” Stone said. “Making content available on your home network is more technical than your average home user can handle. If I didn’t enjoy figuring it out, I wouldn’t have done it.”

The technology industry is placing big bets on home networking as a catalyst for new sales, not only for nuts-and-bolts equipment such as wireless routers, but for whole new categories of products and services, from Internet phone calling to “smart” kitchen appliances to assisted in-home medical care.

The reality for now, though, is more pedestrian: For most people, home networking is nothing more than a fancy name for sharing the same printer between two computers, or making a broadband connection from any room in the house. Of the 30 million estimated consumer broadband subscribers, about 17 million U.S. households have so far purchased home networking products. Shipments of wireless routers jumped to nearly a billion units in 2004 and are expected to continue to grow at double-digit percentage rates over the next couple years.

Yet there is strong evidence to show that very few buyers of home networking products use their equipment for more than the most rudimentary tasks. Of 2,700 people surveyed recently by research company Parks Associates, about 95 percent said their desktops were connected to their networks. Printers came in second, at about 75 percent, followed by laptops at 49 percent. Fewer than 10 percent of homes had other devices, such as handhelds, stereos, game consoles, televisions and stereo speakers, connected to their networks.

Nearly nine in 10 people surveyed said they use their home networks to share broadband connections. About 42 percent said they use their networks to share digital photos, compared to 35 percent for music, 22 percent for video and 20 percent for games.

Filling the void
Those numbers indicate a big hole for consumer electronics makers, which are hoping to take home networking to the next level in 2005 by targeting the home entertainment market with a slew of new devices, such as media-oriented PCs and networked personal video recorders (PVRs) and DVD players. The goal is to convince people to store lots of digital media in a central location, known as a media server or “hub,” and broadcast the files wirelessly around the house to any number of different devices.

“The challenge for the industry in the short run is to move consumers to multimedia streaming and central drive sharing,” said Kurt Scherf, an analyst with Parks Associates. “We know there is a critical mass of homes with at least digital music stored on their home computers–the trick is getting them to access that content over their networks.”

One challenge facing consumers interested in building robust home networks is the relative dearth of compatible devices.

Not surprisingly, PCs make up the largest device category that connects to home networks. However, the scarcity of other devices and their low impact is noteworthy.

Manufacturers have been readying new products to tap into home networks, allowing consumers to access content on a broader array of devices.

Last year, TiVo added a networking feature, Home Media Option, to its standard digital video recorder service. The Home Media Option lets TiVo boxes access and distribute content such as music files and digital photos stored on the hard drives of computers, streaming them to television sets or stereos via wired or wireless home networks.

Microsoft’s Windows XP Media Center Edition 2005, sold by Hewlett-Packard and others, positions PC at the center of the home network. Sales have picked up but are still relatively modest.

Those PCs add a second interface for accessing content such as music, photos and DVDs via remote controls. Media PC owners can also watch TV and record programs to the PC’s hard drive using digital video-recording features similar to TiVo’s.

Intel and Microsoft have also begun efforts to jump-start the development of a host of new devices that connect to home networks and share multimedia files with PCs. Ultimately, some of these new devices will be able to play back television shows, the companies have said.

Video games have become a growing influence in the installation of home networks. Both Microsoft’s Xbox and Sony’s PlayStation 2 have built-in Ethernet ports for connecting to the Internet to play online games. Doing so can be as simple as extending a cable from a router, but many gamers opt for Wi-Fi setups to extend an Internet connection from one room to the next.

Microsoft, which has signed up more than 1.4 million subscribers for its Xbox Live online game service, is promoting deeper connections with Xbox “Extender Kits” that hook up the game console to a PC running Windows XP Media Center, turning the Xbox into a conduit for displaying photos, videos and other media content stored on the PC.

Thinking big
Other companies, such as Intel, have been working on a larger approach to integrating networking technology into homes.

Recently, Intel made health one of five areas it will focus on in coming years. The Digital Health Group will develop products and explore business opportunities for Intel architecture products in health care research, diagnostics and productivity, as well as personal health care. The division is part of an effort first conceived of in 1999.

Intel researchers surveyed consumers asking what they wanted from their digital homes. Many respondents said easier access to digital entertainment, but a significant number asked for something more useful and potentially more challenging.

The company started projects and trials in 2002, using home networking technology to aid in the early detection of mental illness, such as Alzheimer’s disease, in the elderly. The company is also working to help caregivers more closely monitor the health of seniors.

“I joke that we started with digital entertainment and we ended up with dementia,” said Eric Dishman, director of proactive health research at Intel. “There’s more to networking than broadband and video on demand.”

Intel has been using several different types of networking technologies, including sensors, wireless and wired, in its health care projects.

Networking is hard
The challenge is getting the different networks to work together and in such a way that is easy for non-technical people to understand.

Stone, the Web designer, said he’s experienced high demand for his networking knowledge. He’s set up wired and wireless networks for family members and even agreed to share his broadband connection with a neighbor across the street in exchange for beer.

“There’s more to networking than broadband and video on demand.”

–Eric Dishman,

More recently, he’s been tinkering with sharing multimedia files over his network, mostly accessing his digital music files on his PC with his TiVo digital video recorder using Home Media Option.

Unfortunately, he said, he believes many of these advanced home networking applications are still too complex for most people.

“That’s the problem with much of this stuff,” Stone said. “In theory, everything should work together, but nothing works seamlessly.”