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The May 23, 2002 Issue Provided by System Dynamics Inc.
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Your Voice -- Readers' Comments

Market Potential for "Broadband Plumbers"

One of our readers wrote to ask our view of the market potential for broadband plumbers. He wondered whether we thought that "the folks that currently provide home theater solutions are best positioned to expand into this 'data services' space" and whether "data only" companies would survive.

We think that the market potential for "broadband plumbers" is very high. Over the next few years, the "home network" will be extended from the PC domain to include all the audio and video equipment, and will be as taken for granted as electric and telephone wiring, water and gas. As we've written in the past few issues, several products already on the market are connecting the PC and CE domains and that will only increase with time as traditional audio and video distribution goes digital.

An increasing percentage of new homes are getting structured wiring - at around $2500 a pop - some much higher. This year and next, there's going to be a big push on consumer (and realtor and builder) education to make structured wiring a "must have" in all but the lowest-end homes.

For existing homes, the wild card is to what extent emerging "no new wires" solutions will work well for voice and video. If they do, then most existing homes won't need to retrofit new wiring. The jury is out.

The home theater guys - CEDIA members, mostly - are nibbling at this, but many don't have much digital experience - especially the networking expertise required to do it right. Many if not most of them are focused on the high end - they'd rather do 50-100 jobs a year, each at $20K, than move down-market to address the huge audience that today only wants to share the PC in Mary's bedroom with the cable modem connected to the PC in Daddy's office. So lots of other folks will address the mass market, including the cable ops and maybe the telcos.

There are very few "data only" companies. Most "broadband plumbers" we've written about do data, telephony, and video, with add-ons for home security, home automation, home theatre, whole-home audio etc., etc. They make more money on the add-ons than on the structured wiring. And the nice thing for new homes is that it's all included in the mortgage - even that $20,000 plasma display you can't live without - and therefore tax-deductible (at least in the US).

The "x/Pad"

Knut Flottorp wrote us from Norway, in response to our previous references to Webpads. He said that "I am about to form a consortium to specify the device, where the generic term is "x/Pad". This will be split into single-network devices (WLAN/WiFi) and dual networks (WLAN + GSM/GPRS).

"The x/Pad itself is defined as the ultimate slate for user interface. This is what the (Internet) user has at hand of enhanced devices to make use of a new generation applications - some focused on home use, although the marketing is also focused to office and engineering applications, public offices such as police, ambulance and disaster recovery, finance sector squarely as enabler of e-commerce by providing a secure platform for payments."