The Home Infostructure

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Buck Melton
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The Home Infostructure A Pervasive Computing Platform for the Home Ian O

2 Presentation Overview The convergence of home networking, broadband Internet access, and residential gateways. Market Environment and Industry Convergence The Consumer Technology Value Chain The Home Infostructure Definition Technology Components Deployment Phases Market Drivers Network Evolution

3 Pervasive Computing What is it? Goal Invisible computing where microchip intelligence is embedded into everyday objects and devices Interconnect people through a globally integrated data network Extend the Internet cloud into hands of mainstream consumers Long Term Vision Consumers can access information, entertainment, and communicate for anywhere at anytime... A billion people interacting with a million e-businesses with a trillion intelligent devices interconnected... (L.V.G)

4 Forces of Convergence 1) Deregulation of Global Infrastructures Multiple industries including energy, telecom, cable & broadcast, etc. Competitive environment with new opportunities and threats 2) Embedded Computing & Information Appliances Decreasing cost and increasing power of silicon intelligence 3) Analog-Digital Conversion Content: Records/Tapes to CDs/MP3s/DVDs Infrastructure: PSTN to IP- based networks 4) Adoption of Internet as Commercial Channel Secure transaction processing, e-commerce, banking, virtual retailing

5 Value Chain For Consumer Technology Tier 1- Network Infrastructure Digital network serving as mass market information infrastructure or infostructure. Tier 2- Devices (information appliances) Electric devices with embedded intelligence and communications abilities become electro-domestic network devices (ENDs). Potentially includes all appliances, electronics, and computers. Tier 3- Content Digital Media Commodities (DMCs) take the forms of Communications, Information, and Entertainment Titles Tier 4- Services Human interface activities including: Submarket brokering Network access & control (remote access, automation, telemetry, etc.) Network administration (Technical support, network maintinence, etc.) Residential services (Home health care, security, energy management, etc.) Customer relationship management (billing, branding, and education)

Information Economy Derivative Markets Model (IEDMM) Derivative Market Premise The growth potential for the higher tier markets is based development of

6 Information Economy Derivative Markets Model (IEDMM) Derivative Market Premise The growth potential for the higher tier markets is based development of underlying market tiers The infrastructure market (Tier 1) must mature in order for the device (Tier 2), content (Tier 3), and services (Tier 4) markets to grow.

7 The IEDMM Detailed Perspective

8 The Home Infostructure Connecting residential consumers to the Internet Role Pervasive computing platform for the home Economic conduit between Internet-based vendors and residential consumers Purpose Provide interconnectivity for intelligent devices Ubiquitous access to home network and the Internet Enables users to communicate and share data

9 The Home Infostructure Technology Components 1) Broadband Local Loop 2) Residential Gateways (RG) 3) In-Home Networks (Information Appliance Network)

10 Broadband Local Loop (Home Internet Connectivity) Functional Requirements High-Speed (>1Mbps) Persistent Connection Bi-Directional Communications Simultaneous Multi-User Support Quality of Service (QoS) Scaling Enabling Technologies xdsl Cable Powerline (DPL) Wireless Satellite FTTH

11 Residential Gateway (LAN-WAN Interface) Functional Requirements Remote management access platform Sub-Network Bridging (Interconnectivity and Intercompatibility) Distributed application platform Firewall Enabling Technologies OSGi specification Home Gate Cisco reference designs Jini/Java Universal Plug-n-Play

12 In-Home Network (Information Appliance Network) Functional Requirements Reliability: Tolerate environmental fluctuation (noise interferace, multipath) Ubiquity: Prevalent network access points Cost: Affordable for mass market Speed: Support distribution of media rich content (>10Mbps) Mobility: Support untethered devices Quality of Service: Scalable QoS levels for application requirements of individual devices Security: Authentication, encryption, etc. Remote Management:queries, configuration, upgrades Ease of Use: Like telephones and TVs Enabling Technologies (without new wires) Phoneline (Backbone) Powerline (Backbone & Control) Wireless (Mobility) Enabling Technologies (New Wires) Cat5/10Base-T IEEE 1394 Firewire USB

13 The Multi-Layer Home Network Backbone Networks Mobility Networks Control Networks Wired Networks

14 The Backbone Network (High Speed) Technologies: Powerline and Phoneline (Home PNA) Benefits: Phoneline: Current products can interconnect PCs and peripherals for shared Internet access. Powerline: Offers ideal architecture for data network since majority of devices must already connect to power source in order to operate. Drawbacks:Does not solve mobility requirement. Too expensive for low-bandwidth (control and automation) solutions. Phoneline: Since phone jacks do not offer sufficient network access points to support pervasive computing within home it cannot serve as long term backbone solution. (ubiquity requirement) Powerline: Experimental technology currently in field trials

15 Mobility Networks (Wireless & RF) Technologies Home RF Bluetooth IEEE Sharewave/ Proxim Benefits: Provides untethered solution for devices that need simultaneous mobility and communications Drawbacks: Limited bandwidth, unresolved security issues, network infringement issues, and comparatively high cost

16 Control Networks (Low Speed Powerline) Technologies X10 CEBus Lonworks Benefits: Existing product solutions, established industry standards, low cost, simple implementation for control and automation. Drawbacks: Cannot support real time, high bandwidth, or mobility requirements. Value proposition of stand-alone applications does not offer incentives for mainstream market to consume products.

17 Wired Networks Technologies USB Cat-5/10Base-T IEEE 1394 Firewire Benefits: Optimal communications environment: Robust, reliable, high speed, etc. Drawbacks: Penetrating mass market requires no new wires technology. These solutions will primarily extend only to new homes with structured wiring and the technophile/hobbyist and professional home user market.

18 Home Networking Deployment Phases and Market Drivers Technology is absorbed into any given community in stages according to the psychological and social profiles of various segments within that community. Geoffrey Moore Converging markets will mature in 4 phases Phase 1: Interconnecting PCs Phase 2: Broadband convergence (voice and data) Phase 3: Service provider deployment Phase 4: Information appliances Each phase addresses different needs of different segments at different points in time

19 Technology Adoption Lifecycle The model describes the market penetration of any new technology product in terms of a progression of the types of consumers it attracts throughout its useful life * Source: Crossing the Chasm by Geoffrey A. Moore, Harper Business 1991

Market Adoption of Technologies Phase 1: Interconnecting PCs Phase 2: Broadband convergence (voice and data) Phase 3: Service provider deployment Phase 4: Information

20 Market Adoption of Technologies Phase 1: Interconnecting PCs Phase 2: Broadband convergence (voice and data) Phase 3: Service provider deployment Phase 4: Information appliances The adoption cycle for the different market phases will overlap in time. Each successive market phase will increase in market reach (size) and duration (time).

21 Phase 1- Interconnecting PCs Market Segment Analysis Psychographic Profile Upper socio-economic, educated, hobbyist, technically savvy Subset of estimated mil. Multi-PC-owning households Killer Applications Connecting PCs, peripheral sharing, Internet account sharing. Spending Threshold $50-$100 per node (analysis estimate $1.5B industry?) Network Features Market adoption somewhat congruent with broadband deployment Use of set-top box modems or basic router-type gateways Home PNA-based (phoneline) technology for in-home connectivity

22 Phase 2- Broadband Deployment Killer Applications Market Segment Analysis 1st generation of converged voice and data VoIP, web applications, multi-player gaming Market Driver: Cost displacement Average telecom spending: $60/month (local &long distance) 18 million homes with multiple phone lines 22 million ISP subscriptions ($20/month for 28.8/56Kbps) Network Features Devices: 1st gen. Info appliances like digital telephony devices (VoIP phones) and PC substitutes like web TV, intelligent control consoles Home Network: 2nd gen. Home PNA and 1st gen. powerline and wireless Gateway: QoS for bi-directional isochronous data (voice traffic), basic firewall and network bridging capabilities.

23 Crossing the Chasm The Aggregate Market View A chasm will separate the aggregate market into two main groups. In crossing the chasm, the market drivers (source of incentives) will invert from consumer demand to vendor supply. Vast majority of market opportunity resides in the Late Adopter segment Marketing responses between these groups will differ significantly according to their psychographic profiles.

24 Different Markets - Different Strategies Product positioning to cross the chasm* Market Segment Psychographic Profiles Early Adopters Innovators, visionaries, techies Technology Focus (technical gadgets) Consumer Driven (demand) consumer wants access to technology Value Proposition: More technology & better performance Late Adopters Mainstream consumers Solution Focus (consumer commodities) Vendor Driven (supply) vendors want access to consumer Value Proposition: Convenience, reliability, low cost * Solution for crossing the chasm: Mass market deployment of an integrated Home Infostructure.

25 Phase 3- Service Provider Home Infostructure Deployment Definition Integration of broadband, RG, and multi-layer home network technology. Deployed by service provider as an end-end platform for distributing digital content to consumers. Value Role Economic conduit between residential consumer and Internet-based vendors worldwide The service providers that deploy Home Infostructure solutions will have significant market leverage by effectively owning the access platform to each each household (as a center of economic consumption).

26 Phase 3- Service Provider The Transition to a Digital Economy Killer App Breakdown Obsolescence of voice-data model Pumping bits (digital plumbing to/from home and throughout premises) Bit Properties and Network Requirements Latency reqs: Voice (VoIP) bits vs. web page bits Bandwidth reqs: DVD downloads vs. web pages download Isochronicity reqs: MP3 download vs. Real Audio streaming The New Virtual Products Digital media commodities (DMCs) Communications Information Entertainment Titles

27 Phase 3- Service Provider Service Value in the New Economy Killer Services Network Maintenance Remote management & technical support Customer Relationship Management (CRM) Consolidated billing, branding, customer service interface Residential Services (Bringing brick & mortar services to the home) Home Health Care, Energy Management, Banking & Investment, Telecommuting, On-line Shopping, Distance Learning, Home Security Value Proposition of the New Economy The purpose of the technology infrastructure, the devices, and the content is ultimately to achieve the following goals for the consumer: Save time Save money Simplify life Enhance leisure activities (like entertainment)

28 Phase 4 - Information Appliances Mass market penetration of standards-based Home Infostructure solution Purpose: Provide a unified platform that satisfies all of the mainstream consumer s needs for communications, information, and entertainment. Residential Gateway Security and privacy firewall Supports secure E-commerce transactions, remote home control, and access from authorized service providers. QoS supporting a multitude of intelligent devices Different OEMs will make devices that competing for bandwidth. Upgrade platform Remote network configuration, device queries, service deployment, software upgrades, etc. Application Server Distributed computing platform for home Multi-layer Network Bridging Protocol translation and physical interface for multiple in-home networks (backbone, control, mobility, entertainment, security, etc)

29 Phase 4- Information Appliances The Home Network Standards-based powerline and wireless technology will supplant phoneline technology. Home network technology invisibly penetrates mass market through: 1) Service providers that deploy Home Infostructures (embedded into RG) 2) OEMs will ship network-enabled devices (embedded powerline and RF chips).

30 Phase 4- Information Appliances Movement towards non-pc-centric computing Market Drivers Deliver solutions to the 50% of US households without PCs Just because consumer doesn t have PC doesn't mean they don t spend money on products and services (phone calls, CDs, movies) that can be delivered digitally over the Home Infostructure platform. Device Evolution When Home Infostructure penetrates critical mass of mainstream marketplace, OEMs will evolve devices to leverage new digital infrastructure. Embedded intelligence and networking technology will exist in all electro-domestic devices (appliances, electronics, and computers) OEM Service and Content Bundles Intelligent devices will be marketed with content subscriptions and service agreements Cross-channel marketing efforts between content/service providers and device OEMs Home news printer from USA Today/Hewlett-Packard Appliances with energy management features from Maytag/PSE&G web pad from AOL

31 Distributed Computing Client-server architectures for the home Definition: Broadband network enables multi-media content to be streamed from servers to thin clients (at both LAN and WAN levels). Concept Example: Enikia s Powerline Distributed Music System

32 IEDMM Composite Model

33 Profit Incentive for Home Infostructure Deployment Accounting Category Revenues (Tier 3 + 4) Itemized Breakdown Net Present Value (NPV*) of: Digital Media Commodities (Communications, Information, & Entertainment Titles) <Fixed Costs> (Tier 1) Services * (sub-market brokering, integrated solutions, CRM) Infrastructure Investment for: Hardware Costs Implementation Costs (system installation and configuration) <Operating Expenses> (Tier 1) Net Present Value (NPV*) of: Technical Maintenance Costs Administration Costs Operating Overhead NET PROFIT Aggregate Market Value (NPV)

34 Enikia Incorporated Enikia provides high-speed home networking technology enabling the transmission of communications, information, and entertainment content over the home's powerlines at speeds of 10Mbps and beyond. Enikia's technology uses the AC electrical wires within the home as the backbone for an Information Appliance Network (IAN TM ) that will allow nextgeneration appliances, computers, and consumer electronic devices to communicate with each other. Enikia's approach offers a robust solution that will put the power of the Internet and the vision of pervasive computing into the hands of the domestic consumer. Founded in 1997, Enikia Incorporated is a privately held company headquartered in Piscataway, New Jersey. For more information on Enikia s technology or to request white paper research visit or contact the following Enikia representatives: Enikia Incorporated 200 Centennial Avenue Piscataway, NJ Main (732) Fax (732) Jeff Gray Product Manager (732) x2010 jgray@enikia.com Ian O Sullivan Strategic Marketing (732) x2006 iano@enikia.com All content is copyright 1999 Enikia Incorporated

Introduction. State of the Market

Introduction. State of the Market Introduction State of the Market The Digital Age of Consumer Electronics 1001010100010100100000000 1010001010001010101001011 Digital technology brings 0101111010001001010100101 Higher accuracy 1100010111110101011111000