Emerging Technologies: Wi-Fi & Wireless Home Networks - US - October 2004

SUMMARY

The emerging wireless home network market has gained momentum from thedeployment of high-speed Internet connections in homes and as a result ofinnovative research and development by computer makers and other CEmanufacturers. Commonly referred to as Wi-Fi (wireless fidelity), wirelessnetworking is also experiencing rapid levels of deployment in environmentsoutside of the home. The popularity of wireless networking in the home and homeoffice/small office contexts continues to exhibit strong growth in 2004 whichMintel expects to continue.

With increased demand for high-speed Internet, the range of householdnetworking devices has grown rapidly, allowing consumers to share this resourceon equipment throughout the home. In Mintels exclusive consumer research, 80%of respondents who have a wireless home network also have high-speed Internet.

The dynamics of consumer home Wi-Fi usage is of critical importance tomanufacturers. With such a wide range of competing technologies and standardsavailable to consumers, communicating product attributes and creating perceivedneed for wireless network devices is an ongoing challenge. Mintels uniqueconsumer research and market analysis breaks down important factors in the homewireless network market, including detailed data on consumer attitudes andbehavior. Market drivers and the supply structure are assessed and explained,and a five-year forecast anticipates important developments in the market.

Home wireless networks, as defined in this report, include hardware based onWi-Fi standards (protocols) that are utilized to connect computers, computingdevices and resources such as a DSL or broadband connections. The marketincludes devices used in the all small/home office contexts. Market coveragedoes not include business, institutional or public wireless networking systems.The definition also excludes mobile products such as Blackberry devices, PDAsand similar consumer electronics.

Wireless home networks utilize wireless fidelity standards. The term Wi-Fi isused throughout this report to describe wireless network devices.

The term high-speed Internet is used frequently throughout the report. Theterm includes both broadband and digital subscriber line (DSL) connections.

TABLE OF CONTENTS

INTRODUCTION AND ABBREVIATIONS

• Introduction
• Other Relevant Reports
• Definition
• Abbreviations and terms
• Abbreviations
• PCI
• Terms

EXECUTIVE SUMMARY

• Introduction
• Wi-Fi connectivity driven by speed and innovation
• Market expands 298% in two years, continued growth expected
• The impact of high-speed Internet on Wi-Fi deployment
• Many manufacturers participate, three companies dominate
• Homeward-bound Wi-Fi equipment targeted for mainstream consumer
• Diverse retail channels cater to the Wi-Fi market
• Consumers deploy both hardwired and Wi-Fi networks
• The U.S. wireless home networking market and the future

MARKET DRIVERS

• High-speed Internet connects consumers with wireless home networking
• Figure 1: Total high-speed Internet penetration and forecast, 2002-2007,March 2004
• Figure 2: Incidence of household computer ownership, Spring 2004
• Figure 3: Incidence of home network deployment and high-speed Internetsubscriptions, July 2004
• Wi-Fi connects more than PCs
• Introduction
• Figure 4: Household devices connecting with the Wi-Fi standard,September 2004
• The emergence of Wi-Fi home entertainment networks
• Video and gaming applications of Wi-Fi have driven need for fasterstandards
• Telephone applications launched for Wi-Fi home networks
• Why Wi-Fi works across a broad range of products
• Plug-and-play convenience enhances consumer value proposition
• Figure 5: Convenience claims promoted by Wi-Fi device manufacturers,September 2004
• Wi-Fi outside the home makes in-home Wi-Fi a more familiar experience
• Figure 6: Availability of high-speed Internet in U.S. hotel guest andmeeting rooms, by hotel type, August 2004
• Figure 7: Starbucks units offering Wi-Fi hotspots, 2002-2004
• Manufacturers provide innovative solutions to Wi-Fis biggest limitations

MARKET SIZE & TRENDS

• Figure 8: Total U.S. retail sales of wireless home networking equipment,at current and constant prices, 2000-2004
• Figure 9: Total U.S. households with wireless home networking equipment,2002-2004
• Graph 1: Total U.S. households with wireless home networking equipment,2002-2004

MARKET SEGMENTATION

• Introduction
• Figure 10: Wireless home network households, segmented by presence ofhigh-speed Internet connection, 2002 and 2004
• Graph 2: Wireless home network households, segmented by presence ofhigh-speed Internet connection, 2002 and 2004
• High-speed Internet connection
• Figure 11: Wireless home networking households with high-speed Internet,2002-2004
• Without high-speed Internet connection
• Figure 12: Wireless home networking households without high speedInternet, 2002-2004

SUPPLY STRUCTURE

• Introduction
• Figure 13: Retail sales of SOHO/home wireless networking equipmentworldwide, 2002 and 2004
• Cisco-Linksys
• Figure 14: Home wireless networking devices launched by Cisco-Linksys,2004
• D-Link
• Figure 15: Home wireless networking devices launched by D-Link, 2004
• Netgear
• Figure 16: Home wireless networking devices launched by Netgear, 2004

ADVERTISING & PROMOTION

• Taking the tech out of technology
• Crossover between home and business brand-building
• Rebates widespread
• High-speed Internet helping to spread the Wi-Fi word

RETAIL DISTRIBUTION

• Introduction
• Figure 17: Place of most recent computer peripheral purchase, April 2003
• Computer stores
• Electronics stores
• Office supply stores
• Online retailers
• Mass merchandisers
• Bundling of Wi-Fi devices
• Figure 19: Top high-speed internet service providers in the U.S.,September 2004

THE CONSUMER

• Introduction
• Consumer home network deployment
• Figure 20: Incidence of home network deployment, by type, July 2004
• Graph 3: Incidence of home network deployment, by type, July 2004
• Figure 21: Incidence of home network deployment, by household income,July 2004
• Figure 22: Incidence of home network deployment, by household size andpresence of children, July 2004
• Consumer usage of Wi-Fi
• Figure 23: Usage of wireless adapter outside the home, July 2004
• Figure 24: Connected components on wireless home networks, July 2004
• Figure 25: Deployment of wireless home network hardware, July 2004
• Figure 26: Incidence of existing hardwired home network prior toestablishing wireless network, July 2004
• Figure 27: Incidence of bundling wireless networking components withcomputer purchase, July 2004
• Network security and firewall deployment
• Figure 28: Incidence and type of firewall used by wireless home networkowners, July 2004
• Consumer attitudes towards the Wi-Fi experience
• Figure 29: Ease of wireless home network setup, July 2004
• Figure 30: Overall satisfaction with wireless home network experience,July 2004
• Figure 31: Attitudes towards security, data transfer, and networkexpansion, July 2004
• Intention to deploy a wireless home network
• Figure 32: Incidence of intention to buy home networking equipment, July2004
• Summary
• Consumer home network deployment

FUTURE & FORECAST

FUTURE TRENDS

• Consumers want Wi-Fi for entertainment
• 802.11 to the Nth power
• Figure 33: High-definition television unit sales proejctions, 2003-07
• Graph 4: High-definition television unit sales proejctions, 2003-07
• Potential for redesigned Wi-Fi standards
• VoIP
• A la carte convergence and home connectivity
• ZigBee vs. Bluetooth and expanding the wireless network

MARKET FORECAST

• Wireless home networks
• Figure 34: Forecast of wireless home networking households, 2000-2004
• Graph 5: Forecast of wireless home networking households, 2000-2004
• High-speed Internet connection
• Figure 35: Forecast of Wireless home networking households withhigh-speed Internet, 2004-2009
• Without high-speed Internet connection
• Figure 36: Forecast of Wireless home networking households withouthigh-speed Internet, 2004-2009
• Forecast factors

APPENDIX: TRADE ASSOCIATIONS & PUBLICATIONS

APPENDIX: RESEARCH METHODOLOGY

• Consumer Research
• Sampling & Weighting
• Presentation & Definition
• Further Analysis
• Trade Research
• Informal trade research
• Formal trade research
• Desk & Internet Research
• Sources
• Definitions
• Forecasts

APPENDIX: WHAT IS MINTEL?

• Mintel Reports
• Global New Products Database
• Comperemediaｮ
• Mintel Services
• POS+
• Mintel Consultancy