Cisco Taking On Exploding Home Networking Market
By Wylie Wong
Staff Writer, CNET News.com
July 25, 2000, 9:00 p.m. PT
Cisco Systems, best known for its networking equipment for businesses and service providers, is ready to take on the home market.
The giant networking firm tomorrow will announce that it is teaming with a Southern California land developer and a small service provider to wire 13,000 new homes in Los Angeles with networking technology.
Today's deal is part of Cisco's strategy for the emerging market for home networking, where dozens of companies, including 3Com, Intel, Motorola and start-ups such as 2Wire, are fighting for a piece of the action. At stake is a market that is expected to grow from $600 million in revenue in 2000 to more than $5.7 billion by 2004, according to research firm Cahners In-Stat Group.
With high-speed Net connections becoming more widespread, technology firms believe consumers want all their electronic devices--PCs, stereo, kitchen appliances and security systems--to communicate and share an Internet connection. That way, homeowners can adjust the heat or air condition in a room from a PC, watch a security camera feed of their home over a Web browser, or distribute audio or video throughout the home.
At the heart of Cisco's strategy is a forthcoming new home appliance, called a "residential gateway," that allows consumers to connect electronic devices--PCs, appliances and security systems, with their phone service and high-speed Internet access. Cisco has also recently partnered with a slew of companies, including appliance manufacturer Whirlpool, which is making its appliances more intelligent. Refrigerators, for example, will include Web pads for Internet access.
Similar to Home Director, a home networking company spun off from IBM, Cisco's strategy is to strike deals with land developers and phone companies and cable operators, which will wire homes with high-speed Net access and home networks and offer a suite of new services, such as Net-based phone calls and movies and music over the Web. Cisco recently took a minority stake in Home Director.
Cisco executives today said they have partnered with Southern California land developer Playa Vista and local service provider PaeTec to network 13,000 homes and six million square feet of office space in West Los Angeles.
Through partnerships with service providers, Cisco executives say they also want to sell the residential gateway, available early next year, for installation into existing homes.
Michael Moone, group vice president of Cisco's consumer line of business, said the company's goal is to earn more than $1 billion in revenue in the home networking market within two years.
"It will be a multi-billion revenue market for Cisco, and it's our goal to be the fastest (Cisco unit) to reach $1 billion," said Moone, adding that cable equipment business was previously the fastest, taking about three years to reach $1 billion.
To help its efforts, Cisco today unveiled at its headquarters an "Internet home," a 1,700-square-foot model of a house that's fully networked, including test versions of Whirlpool's Internet-enabled refrigerators and ovens. For example, Whirlpool offers a wireless Web pad that lets a homeowner turn on the oven from any part of the house. In hopes of signing more deals, Cisco executives said they will give land developers tours of the Internet home.
Cisco's residential gateway, which will cost about $500, will support Ethernet, a popular networking standard, as well as wireless, phone line and power line connections, Jared Headley, Cisco's consumer solutions manager. Phone line networking allows PCs to network with each other simply by plugging them to phone jacks, while power line networking allows PCs and other devices to communicate through electrical outlets.
The residential gateway will also offer security software, such as firewalls to prevent strangers from hacking into home networks, as well as anti-virus software, Headley said. Wiring a home will cost $15,000 to $100,000, depending on the features a consumer orders, he said. |
