Sales Of Home PC Networks Slowly Ramp Up, Vendors Say

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The youthful PC-network category has not met supplier expectations at retail, but sales are likely to ramp up for the holiday season and take off in 2002, vendors said. When sales accelerate, venders said they expect Ethernet and wireless products to supplant the once highly touted HomePNA technology.

Home networking vendors and retailers expected 2000 to be the breakout year for the home PC-network category, but they now expect consumers will finally start believing this year that home networking is not only feasible but also accessible.

Jeff Sandler, Brother's senior printer product manager, said he expected home networking to have taken off in a big way and have had an impact on his category. This has not come to pass.

"The [home network] market was not as huge as we thought it would be," added Leslie Kirchbaum, Actiontec's marketing director. "The market sort of fell on deaf ears because dial-up modems were [already in use by] consumers, and broadband was not widely in place."

Retailers are already gearing up for the expected rush. A Circuit City spokesman said the chain is turning part of the space formerly dedicated to major appliances into a home network area. Each store carries an average of 30 networking SKUs, a substantial increase compared with what was found in the stores last year.

When the home network market begins to accelerate, demand for Ethernet and wireless will benefit the most, and sales of phone-line-based HomePNA-standard devices will lag, vendors said.

The growing availability of broadband Internet connectivity will spur sales of Ethernet-network devices capable of data rates up to 100Mbps, and steep price decreases in wireless-network prices will fuel sales of such technologies as 802.11b HR over HomePNA sales, vendors said.

This shift, however, has not yet been fully realized at retail. Data from ARS, La Jolla, Calif., show the majority of home PC-network products on the shelves are PNA-based, followed closely by Ethernet.

HomePNA products will work with broadband modems, but they currently do not have the bandwidth to absorb all the data that broadband can deliver — a fact consumers now understand, vendors explained.

The expected decline of HomePNA share at the hands of wireless and Ethernet has come as a surprise because HomePNA was supposed to be the quick, easy solution for consumers getting involved in home networking. The fact that Ethernet required consumers to run CAT-5 cable around the house was, at first, considered a huge disadvantage. PNA simply uses a home's installed base of telephone wire, and vendors expected consumers to want the easy and cheap way out.

Kirchbaum said consumers have not been willing to trust HomePNA. A spokeswoman for Linksys agreed, adding that people have a better grasp of wireless because of the popularity of products such as cellphones.

That awareness will help bridge the gap between home-network technology and mass-market adoption. Because many wireless products feature 11Mbps data-transfer rates that promise to go higher (see FCC story, page 17), and because cable connections among devices are eliminated, wireless is considered the Holy Grail of network solutions. But its high price tag has prevented many vendors from going forward with development because they did not want to go through an entire product development cycle to sell only a few kits.

Falling prices, however, are changing this mind set.

"Right now the big push is for wireless product," said Shauna Smith, networking analyst for ARS. Prices will need to drop just a bit more before mass adoption is possible, she said.

Starting this year, wireless products have become much more affordable. A Linksys spokeswoman said the company's first kits hit retail in January with suggested retail prices of $249 for an access point and $129 for a PC.

Wireless's new popularity is coming at the expense of Home PNA, Kirchbaum said. "Actiontec had a PNA product ready to go but did not bring it out because we saw the market going wireless," she said.

For more home networking retail statistics, see By The Numbers, p. 14.

Where The Home Networking Kits Are...

As of May 1-15, 2001 Manufacturer & Product Name with Model number

Best Buy

Circuit City

Comp USA

Fry's Electronics

Office Depot

Office Max

Staples

Total # of chains

Avg. price

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