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How Internet Gateways and Smart Appliances Will Transform Our Homes

The idea of smart home appliances communicating on the Internet via wireless or wireline connections has been around for almost the last 20 years. However, until this year the technology hasn't reached a level of efficiency to make the dream a reality. Until now, taking the component costs out of the products to make them affordable was a major stumbling block.

In the early eighties, the computing power of a mainframe would have been required to interface with an Internet-connected electricity meter or home security system. Super-efficient servers have been developed in the intervening time that can handle hundreds of thousands of simultaneous transactions. A range of new networking technology that enables people to connect continuously and inexpensively to the Internet at increased data transmission speeds is proliferating. A recent break-through in connectivity software means that Internet intelligence can now be deployed on inexpensive workhorse chips. This has put the Internet-enabled electricity meter or VCR within the reach of the ordinary person.

International Data Corporation (IDC), the independent forecasting group, has estimated that by 2004, Internet appliance sales worldwide will be worth around $17.8b billion. Already, in the US, tens of thousands of homes are equipped with home-automation devices and there are signs that Europe—which has much lower home Internet penetration levels—is also warming to the idea. For instance, a 2001 study by the UK's Consumers' Association found that almost half those surveyed were interested in having the functions a "smart home" could offer, if they were affordable.

Most analysts agree that the most important Internet-enabled home appliance opportunities and market approaches will be formulated in the next 18-24 months. In the future, it will be possible to buy a permanent home Internet connection for the equivalent of $15 or $20 a year alongside an appliance, just as we buy its insurance today. Telecoms operators will install a home Internet gateway that can be used to communicate with, and control, a wide range of Internet-enabled appliances, bundled with phone services.

The science of the appliance is changing.

A vendor of a security system may offer an intelligent, Internet-connected security service that alerts a rapid reaction team if there is a break-in at your house. Using a PC browser or mobile Internet device, owners of smart homes will be able to program home lighting and curtains to give their house a "lived-in" look before they go on holiday or even while they're away.

The advantages of Internet-enabled appliances are not confined to individuals, but extend to society as a whole. Take, for example, the situation in California over the summer, where electricity shortages have led to blackouts. By embedding intelligence in a freezer, it can tell when electricity is scarce and then shut down for half an hour without any adverse problems. Multiply this capability across thousands of homes at peak demand and you can envisage the power savings which benefits the individual consumer's pocket as well as the environment.

Entertainment is likely to be a huge growth area for the Internet. Consumers will be able to access and control their VCR remotely via a website or WAP phone operated by the manufacturer or service provider, even if they are overseas. A web-connected machine won't need a clock as the server can tell the VCR when it should start taping. Set-up memory will be obsolete as the settings are stored by the server or on-screen display hardware. More importantly, programming and playback will be controlled via the web so there's no chance of losing track of where that important recording went.

The service provider will have the opportunity to generate revenues from selling advertising space on the website from which the VCR is managed. The potential to capture new audiences and build better relationships with existing ones is huge. From the data on the viewing habits of the consumer captured on the website, the operator will be able to personalize content and take advantage of highly targeted direct marketing opportunities.

One advantage of using a web server is that an Internet browser anywhere in the world can query the device and view data. Providing the consumer has the right security codes, they will be able to control their home appliances from their home PC, laptop or Internet-enabled mobile phone. It also means that a device does not require its own display or input interface such as a keyboard, dropping total device cost.


According to Harbor Research, there were approximately 5 billion microprocessors sold in 2000, and only 120 million of them (roughly 2.5%) were intended for PCs. It is estimated that in five years, the number of processors in the average home could grow from 40 to 280 and the number of embedded chips sold to support increasingly intelligent devices could grow to over 9 billion. Intelligence and connectivity will be designed into almost every electronic device.

Ubiquitous home connectivity is now affordable for the ordinary family. It is clear that there will be a complex web of business relationships underlining the next generation of the Internet, with telecom companies likely to be leading the field in providing home Internet gateways. All that remains to be seen is which electronics giants will bring out the first generation of smart appliances and which service providers will design the ultimate Internet-connectivity package to dominate this new market and make our hectic lives just a little bit easier.

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