WAVE Report Electronic Home Expo (EHX) Fall 2002
by John Latta
Wave Issue 0244 12/13/02

Long Beach, CA
November 13 - 14, 2002

EHX is a show about transition. Described as the Premier Exposition for the Connected Home Pros, it is for the home integrators and equipment installers. These are the individuals who install the home theaters and much more. What we found here is that digital is changing this business. Home networking is changing the business. The forward game is in services, not products. EHX is about change and we learned much about the consumer home market in the process.


Dan Quigley, EVP of the Premise Applications Division of Lantronix, gave the lead keynote today. He stated he had 10 years at Microsoft, apparently before going to Premise, which was recently bought by Lantronix. Some of the points made include:

In a recently published report, Forrester predicts that by 2010 that the number of networked devices in the home will reach 14.2 billion and of that 95% will not be a PC. This divergence from the PC begins in 2005 and rapidly accelerates to non-PC devices from 2007 and beyond.

The fastest growing segment is wireless. It is estimated there will be 33m WiFi nodes by 2006.

When consumers were asked if they thought networked devices were important, 49% said either very important or imperative.

Harbor Research also released a report that states the market for smart home controllers and nodes will reach nearly $2b by 2006.

Today, companies such as CompUSA are pushing this trend. Here in California they have a section of the store called Digital Living Centers, which sell installed structured wiring for as low as $149. Home networking, even wiring, is a retail category.

Providing networking in the home must shift to be solution focused. This is the approach we have taken with enterprises and it must shift to the consumer.

With an interoperable platform in the home, it is possible to build a market upon this.

Dan then showed an example of how his software can be used to work with Lantronix devices to literally PnP home electronics devices with a common network infrastructure and control. It was quite impressive. This was used to emphasize the point that being able to use open standards to control many types of devices with a consistent user interface is critical to achieving mass market status in the home. Note that every node had Ethernet at one point and that wireless was pervasive. What Premise is promoting is its SYS home control software. Later I saw this demonstrated in the booth and the value it brought to the home network was significant.

In essence what Premise is saying is that:

Nodes will be commodity;
Making them work has value; and
The value rises with the number of nodes.

FutureHome Guild

We spoke at length with its President, Chris Karminski. The FutureHome Guild is an organization that links installers of home networking equipment. One of its key benefits is a web directory that consumers can use to find companies to do home integration and installation. He had a number of very interesting points.

The home integration market is undergoing a major transition. Here on the show floor there are many from the "old camp," which represents the analog world. These companies install home theaters and audio systems. Very little is digital in what they do.

Now there are an increasing number of companies that have individuals with IT background who are entering the digital home networking business. They know about broadband, IP networking and digital interfaces.

It is clear that wireless will play a major role in home systems. For home entertainment, 802.11a will play an important role because it has the bandwidth.

Finding digitally experienced companies is hard for consumers to do. Many of the companies are very small - just a few persons. The Guild makes it possible for the companies to link up with consumers. The Guild also has an awareness function that brings suppliers in contact with the Guild members.

The Guild was formed in August 2002 and now has 250 members and it is expected to reach 500 next year. The value for both Guild members and consumers comes when we have many members. This gives consumers choice.

Many homes are now being built with CAT 5 installed. This is called CAT 5 unfinished. There is no termination in the walls and there is not a cabinet in the basement. Thus, there is considerable opportunity in providing home networking services in these new homes.

We are working with our members to educate them on how to make the transition from just installations to services. It is clear that there is value in managing and supporting these home networks, yet, many companies have not made this shift and do not understand it.

Much of what you see on this floor is for the 3% of the home owners that can afford anything to go into the home. We are supporting our members to go beyond this with a digital infrastructure in the home.

Internet Home Alliance (IHA)

The WAVE Report spoke with Tony Barra, President of IHA. EHX is where the IHA was broadly exposed. The membership includes: Best Buy, Cisco, General Motors, HP, IBM, Panasonic, Sears, Sun, Whirlpool and many others.

Over the last three years many of these companies met informally to understand this market and its potential. They even went so far as to consider a NewCo but this just could not happen due to the complexities and different agendas. Out of this was formed this non-profit--the IHA.

The Vision of the IHA is:

IHA members are committed to advancing the home technology market through collaboration, research and Alliance Pilot Programs.

If there is one take-away from the IHA, it is that none of these companies knew enough about the consumer market to feel strong enough to enter it - at least with technology based solutions. Thus, a major component of the IHA are its projects and market research. It is through these that the companies learn more from the other members and the difficulties of the market. IHA does primary market research to determine what consumers what, and then seek to evaluate technology based solutions to meet these needs. We found it interesting that Tony stated that two key issues raised in the consumer research were the need for help in meal preparation, and the ability to empty the dishwasher. At first this latter requirement was laughed at, but the members realized this was a real issue. Welcome to the consumer market.

At the center of the Alliance are its Alliance Pilot Programs. It "is designed to advance the home technologies with broadband or persistent connections to the Internet by facilitating collaboration among companies all along the value chain." Sure sounds like a technology company wrote this. Yet, it became clear during the meeting that much was learned from the other companies. Sears has a perspective - "we do not care about what technology is used in home networking. Just make it serviceable and interoperable with future products." Not a view widely held in the computer industry, for example.

As the IHA looks at the technologies and markets, there are three blocks to the evaluation:

Is there a consumer need?

Can there be a technology based solution; and

Is there a business model behind it.

So far the projects have centered in three areas of the home ecosystem:


Entertainment; and

Family and home system.

During the discussion I found that Procter and Gamble has participated, and as Tony said - they bring a lot. But the company has yet to pay the dues and join. One of my observations is that it will be the breadth of the membership that makes the Alliance valuable. In a year the success of the organization could be measured by who the members are. For example has Swanson foods joined or Pizza Hut? Tony smiled and agreed.