"Home networking pact spurs rivals to act"
By Wylie Wong
Staff Writer, CNET News.com
March 11, 1999, 1:15 p.m. PT
news analysis Today's 3Com and Microsoft alliance
will compel rivals, such as Intel, to counter with
more comprehensive home networking plans of their
own, analysts say.
The companies announced plans to combine their
expertise in networking and software for easy-to-use
technology that will allow users to network PCs,
peripherals, and most consumer devices in the home.
The two giants will release Ethernet and phoneline
technology--networking PCs together through phone
connections--in second quarter of 1999, and a wireless
networking product by the end of the year. In the year
2000, the companies will release powerline networking
products, which allow users to network PCs through
electrical outlets.
"Having 3Com and Microsoft team up validates the home
networking opportunity and it means their competition--the
IBMs and Intels of the world--will need to respond
competitively and get wireless, phoneline, and powerline
technologies lined up," said analyst John Todd, of C.E.
Unterberg Towbin.
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Analysts said the 3Com-Microsoft alliance is a logical
one, and they expect other companies to strike similar
partnerships as the emerging home networking market
grows. Analyst firm Cahners In-Stat believes the U.S.
market will reach $230 million by 1999 and grow to $1.4
billion by 2003 as high-speed cable and DSL services
become more prevalent.
Cahners In-Stat analyst Michael Wolf said the alliance
between Microsoft and 3Com is so far the largest in the
home networking market.
"Each company is leveraging each other's strengths,"
Wolf said. "3Com is successful with modems and network
interface cards. Microsoft brings expertise in terms of
desktop software and operating systems."
In the limelight
C.E. Unterberg's Todd said today's deal also gives
phoneline and powerline companies a bit more clout.
Players like Tut Systems and Epigram, wireless
companies Proxim and Sharewave, and powerline player
Enikia all stand to gain from increased interest in home
networking.
"The key thing about this announcement is it raises the
visibility of these other networking providers out there,"
Todd said. "The IBMs, Intels and so forth need to respond
to this type of statement and need to either acquire or
develop these products from these other suppliers. Time
to market is increased because of 3Com's competitive
move."
Most home networking
companies, like Intel, have
latched onto phoneline
networking options as it was
the first technology to
establish standards. Intel
has said it plans to enter the
wireless market, but is still
exploring whether to enter
the powerline market.
The home networking market
is already fraught with
partnerships and joint
ventures. Panasonic today
announced it has invested
an undisclosed sum into
phoneline firm Epigram.
Previously, Cisco Systems,
which isn't in direct competition with 3Com in the home
networking market, partnered with Hitachi and some 30
other companies to have its software integrated into cable
modems and set-top boxes.
"Manufacturers are scrambling to get networking
technology embedded in the products," said
analyst Kurt Scherf of Parks Associates.
Old rivals, old partners
3Com and Microsoft, although rivals in the personal
digital assistant market, have previously agreed to
partner in other markets. As earlier reported, the
pair announced broad plans in mid-January to
create Windows-based networking products to help
telecommunications carriers, businesses, and
consumers build networks that integrate voice,
data, and video.
At the time, 3Com said it planned to use
Microsoft's Windows NT embedded operating
system within its networking hardware for
corporations and carriers. Today's announcement
consummates of the consumer end of that
partnership.
Microsoft and 3Com executives today said their
goal is to give consumers a wide variety of
easy-to-use, easy-to-install home networking
products.
That's why they'll offer Ethernet, phoneline,
wireless, and powerline connections, said Neil
Clemmons, 3Com's vice president of consumer
marketing. "There's an Internet lifestyle emerging
where access to the Internet will come from a
number of devices. It won't be just one media. It will
be multiple media. The goal is to create products
that can interoperate and have common interfaces."
Analysts say ease-of-use is key if the technology
is to be successful.
"Home networking products need to get a lot more
consumer friendly," Wolf said. "You don't want your
brother, sister, or mom to have deal with IP
addresses. And Microsoft with its Windows
operating system can help mask the complexity. If
these two companies can pull this off, it will bring
credibility to home networking."
Microsoft and 3Com's first-generation phoneline
networking product will be sold this fall as add-ons
to PCs, as well as separate products at retail
stores. The cost will be under $99 per PC.
Future products will include a combination modem
and networking card, Clemmons added.
While Cisco and 3Com are networking rivals, the
two companies are not competing directly in the
home networking market, analysts said. 3Com
manufactures low-cost networking cards and
modems, while Cisco partners with companies to
have its software installed in cable modems and
other products for home networking.
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