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issue: October 2007 APPLIANCE Magazine

Appliance Line
Good Reasons to Connect

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Tim Somheil, Editor

Helping consumers stay safe and healthy may make home connectivity worth the investment.

Tim Somheil, Editor

Most consumers investing in home networking do so to expand their entertainment options. Home security is also a major priority.

Long-distance control of clothes-dryer cycle times remains low on consumer wish lists—but this was the kind of functionality touted by the first commercialized home automation systems. Early home automation was also expensive and impractical to install; not surprisingly, buyers did not embrace it.

When the home computer became pervasive in the 1990s and Internet use exploded, it looked as if the prospects for home automation were improving.

Networking, but Not Automating

We’re well into the Digital Age and have witnessed startling changes in consumer technology in the last two decades. The advancement of electronics has changed some aspects of our lives, mostly via our expanded connectivity for personal communication and entertainment. Home appliances that don’t communicate or entertain as their core function have not generally joined home networks. And why should they? Where’s the added convenience?

It is true that electronics are becoming so inexpensive that adding connectivity hardware to traditional home appliances can be accomplished without much of a retail price premium. So why not add the refrigerator to the home network?

The challenge is actually making the connection work. Home networks aren’t easy to get up and running. As consumer technology research firm In-Stat reported a few months ago, it is still primarily the tech-savvy consumers who are setting up home networks, for themselves and their friends. Every additional node on the home network adds further complication and makes the network more of a headache to maintain.

Some of us don’t have tech-savvy friends. Or our tech-savvy friends have stopped responding to our desperate IMs. We can now turn to a growing number of home technology services to help with home networks. Best Buy has its Geek Squad. Broadband suppliers are offering services as well.

More-sophisticated networks are put in by home systems integrators and installers. Parks Associates, which reports on this market, projects U.S. revenues through this channel will grow 8–9% from 2007 to 2008, with total revenues topping $11 billion in 2008.

These installers have historically split their business 50/50 between new construction and remodeling/retrofit, but that’s changing. The slowdown in new home sales growth in the United States hurts the new construction side of this business. At the same time, new technology has introduced better power-line and wireless options to make it more feasible for homes to upgrade their entertainment, security, and other home systems, Parks reports.

Pay to Stay Connected

Fee-based remote-access services are also growing, In-Stat says in a report released a few weeks ago, which focused on the North American market. The number of households that pay for remote access to control or monitor home automation or security systems is expected to grow 25% annually from 2007 through 2011.

“Thus far, the tech-savvy and early-adopter households are the ones with automation systems connected to a home network, and they are experiencing the first generation of new products,” says Joyce Putscher, In-Stat analyst. “Early adopters can be more demanding of product capabilities, and first-generation products often have some bugs to work out.”

But 25%-per-year growth may indicate that the customer base is growing beyond the early adopters. I would be willing to bet that the key driver here is security. Interestingly, In-Stat shows that renters are willing to pay more for remote access of home automation and security than homeowners, despite their average lower income.

Home Health Care Connections

Another big driver of connectivity to the home will come in the form of remote home health monitoring. Parks says financial support from governments in Western Europe and Canada will drive this segment of the industry. It predicts the tele-home-care market in these regions will grow from $70 million in 2006 to $225 million by 2011.

“Regulatory authorities believe remote home health monitoring solutions provide an opportunity to make care delivery more efficient without reducing the overall quality of care,” said Harry Wang, senior analyst and author of the Parks report. If governments can establish permanent reimbursement mechanisms for these solutions, and if a broad-based consensus is reached on feasible business models, the programs will flourish. Those are both big ifs. Still, tele-home care does have the potential to be part of a significant transformation in global healthcare.

Making our homes safer, keeping our loved ones healthy—these are truly compelling reasons for consumers to invest in home networks and remote connectivity. 


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