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About This Technology

Today's broadband-connected home networks help residential users enjoy entertainment, perform work, secure their homes, automate appliances, maintain health and fitness, conduct transactions, and connect people to one another. Tens of millions of households have already adopted broadband internet, Wi-Fi, massively multiplayer games, video on demand, VoIP, and IPTV services. But home-network technology is at a far more advanced state of development for some users—such as those who route video to multiple TV sets from home servers, use their cell phones to check images from home-security cameras, and control lights and climate via wall-mounted touch screens. Emerging applications include sensors that detect a user's location within the home, so that audio, video, and lighting follow the user. Home theaters also promise to become venues for immersive gaming, TV commerce, and virtual-reality fitness training. Many benefits become possible as a result of novel interconnections among broadband services, storage devices, displays, sensors, software, and other technology elements.

Although "smart-home" technology progressed slowly for decades, mass markets for home networking finally emerged in recent years. Wireless technology and standards help users address some of the key obstacles that they formerly faced—especially the difficulty of installing home networks and handling incompatibilities among multiple vendors. Wi-Fi and internet protocols allow persons of intermediate technical ability to connect multiple devices to a broadband internet service. Advanced applications still require either professional installation or system integration by a household member who has suitable expertise and patience. But even the most advanced users and installers face decisions and challenges that reflect unresolved industry issues. Notably, demand clearly exists for house-wide access to entertainment. But digital-rights management creates challenges for interconnecting HDTV sets in home networks. Similarly, worries about safety and the price of energy promise to drive demand for networked home-security and energy-management applications. But customers still need solutions that simplify the job of interconnecting cell phones, security sensors, and climate controls.

Development of home-networking markets will affect household lifestyles, the business environment for industries that sell retail products and services, and suppliers to those industries. Future users will enjoy new content-delivery channels, an array of new telecommunications services, and a sense of command and control over household security and comfort. Manufacturers, service providers, retailers, and other organizations are creating complex multiparty business models, investing in large R&D programs, and devoting a good deal of marketing effort to home-network business development. Significantly, some home-networking companies are influenced by the cell-phone business, which offers low price of entry in exchange for recurring revenue. But nobody knows if the monthly and pay-as-you-go models will win the day against a simple cash-and-carry, plug-and-play approach to retailing. In any event, winning organizations will maintain a high level of awareness about what technologies households are prepared to accept and what specific benefits will become possible as technology progress translates into value.