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Technology Stocks : Echelon Corporation (ELON)
ELON 21.88+10.1%Oct 6 5:00 PM EST

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To: DD™ who wrote ()5/8/2000 7:10:00 PM
From: William Peavey  Read Replies (1) of 3076
 
The Breakthrough
Transforming merely cool technologies into essential ones
By Reza S. Raji

Ever wonder what it takes for a new technology to make it big? What are the important characteristics
of a new product, architecture, platform, protocol, or whatever that catapult it from a mere cool
technology to a fundamentally important, economical, and popular staple in society?

Consider the Internet story. The Internet's predecessor, the ARPANET, was a government
project conceived in the 1960s. Yet, it has only been in the past decade that the Internet's
applicability, in particular the World Wide Web, has reached the masses. And this, we're told, is only
the beginning of this revolution. What catapulted the Internet into the mainstream?

The Internet revolution, along with most truly successful products and technologies, has several key
attributes that separate it from the carcasses littering a vast technology wasteland:

Complete end-to-end solution. It takes more than a protocol or a piece of hardware to create a
product. For the Internet, the complete solution consisted of the TCP/IP protocol, as well as the
HTTP protocol, and of course the Web browser.

Ease-of-use. This was of prime importance in the Internet case. The products and technologies (from
the user's point of view) must not only be painless but fun to use. Just watch anyone browse the Web,
or buy a book or a CD online.

Open and Interoperable. Not only do the different parts of a product need to work well together; it
is just as important for the product as a whole to work with other products. It is seamless
interoperability that permits one to access the Internet via a telephone line at home or the corporate
LAN at the office, and to run the seemingly limitless number of software applications that are available
for use with it worldwide (e-commerce, e-mail, etc.).

Economical. It is surprising how affordability is neglected. For a product or technology to be
economical, the total cost of the product must be taken into account, including the initial purchase
price, life-cycle costs (service and maintenance), as well as the cost savings and intangible benefits
gained by using the product. This, ultimately, is what makes the product compelling enough for anyone
to spend time and money on.

So what's that got to do with the home?

The 30-year-old smart-home concept covered by the likes of Popular Science is well-known to
most readers. It is safe to say that home automation in that sense has failed to blossom. What is the
mystery of this market?

Let's apply our four principles to the existing home automation market. It would be safe to say that no
manufacturer today offers a complete, end-to-end solution. No single company could offer a system
that addresses all the needs of a homeowner (security, HVAC, lighting, audio/video, sprinkler, etc.).
Ease-of-use has certainly been a challenge in an industry where product price points and the expected
end-user knowledge are so low. As for an open and interoperable solution, who're we kidding? And
although many home automation offerings are very capable, relatively few have found them
economical.

What makes today different from any other time in recent memory is the presence of several key
enablers with the clout necessary to jump-start the home networking market.

For one, the presence of an Internet connection into the home can turn a once stand-alone home
automation system into a dynamic environment with many new applications. The imminent "web-tone"
coming into the house would allow you to monitor and control things from remote locations. This vital
pipe would also allow service providers (e.g., cable companies, telcos, utility companies) to provide
value-added services and options to complement your home network.

Never before has a set a technologies been available that could provide a complete, end-to-end
solution for complete home networking. In addition to the Internet, new and existing standards for
open and interoperable networking among devices, entertainment systems, and PCs are out there.

Utility deregulation, happening around the globe, as well as the telcos' increasing desperation to find
new sources of revenue in a new economy, is another reason why the smart home has a chance of
making it and making it BIG this time around.

What sets all this apart from the dreams of the past is that there is a
huge market with big players that have a lot of money who are
interested in making a lot more money. The challenge is the
involvement of players with fundamentally different business models
that have to work together to cultivate this new opportunity. It may
not happen overnight, but as history has shown us, it will happen
one way or another.

Reza S. Raji is director of business development at Echelon
Corporation, the developer of LonWorks networks. He has more
than 15 years of experience in embedded systems, networking,
and control systems. He can be reached at reza@echelon.com.

echelon.com
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