Internet Appliances Next Step for Wired Households

Despite a slow start, the Internet appliance market is poised to grow dramatically, with shipments of more than 174 million units expected by 2006, according to a study by Allied Business Intelligence (ABI).

Much of the expected growth will occur outside of North America. Initially, the United States and Canada will lead in appliance sales, but they will account for only 37 percent of shipments worldwide by 2006.

The study found that early attempts at Net appliances failed because of poor product designs, too-high hardware costs and flawed business strategies by the vendors.

“Vendors must continue to innovate and to design application-specific Internet appliances with an eye on appealing form factors that encourage frequent usage,” said report author Navin Sabharwal. He noted that early adoption will occur in households that already have PCs, not in non-PC homes, which many in the Net device industry expected.

“The goal for these devices should be to complement and leverage the PC rather than attempt to replace it,” he said. “That means the Net appliance market really is ‘PC-plus’ not the “post-PC.”

The adoption of in-home networking is critical for adoption of Internet appliances, and the report predicts that wireless networking and networks that use existing power lines will succeed in the long term.

The number of consumers with Internet access, the type of access they have and the prices they pay are significant factors in the future adoption of Internet access devices, according to the study “Internet Access Devices in the Home: Are Consumers Ready?” by Cahners In-Stat Group.

“These days consumers have many choices, ranging from PCs and laptops, to Web phones, and Internet appliances,” said Cindy Wolf, research analyst with In-Stat’s Internet Access Devices Service. “As the number of Internet appliances grows, there is an increased need to define the market. Even consumers themselves have trouble defining these types of products. In In-Stat’s survey of over 1,000 consumers, respondents were found to have varying opinions on what they believe an Internet appliance is and which type they are interested in purchasing.”

Respondents’ current ownership of consumer electronic devices is also a key to determining their interest in Internet appliances. In addition, the continued growth in the number of products in this space has been driven by the increase in those households with broadband access and home networks.

In-Stat’s survey also revealed:

• 41 percent of consumers have more than one PC.
• 58 percent of respondents accessed the Internet from home, and almost 30 percent access the Internet at work.
• Those that are interested in purchasing an Internet appliance spent between six and 20 hours per week on the Internet.
• With the increased number of computers in the home, as well as the growth of Internet appliances, home networking is becoming a significant issue in the future of the wired home.