Retail and high-tech companies launch Internet Home Alliance to draw more consumers into the marketplace.
Industry leaders in the home-networking business expect the Internet market to explode with homeowner's adoption of both broadband and the "Internet lifestyle."
A dozen national retailers and high technology companies - including some competitors - each contributed $2.5 million to ignite this explosion with the founding of the Internet Home Alliance.
Mike Moone, group vice president and general manager of Cisco Systems' Consumer Line of Business, announced the founding of the alliance Oct. 17 at Forum 2000, a home networking conference sponsored by Parks Associates in San Francisco. The alliance founders include 3Com; Best Buy Co. Inc.; Cisco Systems Inc.; CompUSA; General Motors; Honeywell; Invensys; Motorola; The New Power Co.; Panasonic; Sears, Roebuck and Co.; and Sun Microsystems. The contributors include Reliant Energy and Texas Instruments Inc.
Moone met with Bill Kenney, vice president of strategy, home and online services for Sears, Roebuck and Co. to discuss the possibility of forming an alliance. The Internet Home Alliance was later founded with the mission of educating consumers about home automation and home networking opportunities. The alliance plans to create awareness by posting information on its Web site at www.internethomealliance.com, conducting primary research and testing new products and solutions in an applications laboratory.
"Rather than wait around for the Internet to successfully come to the home, we've really decided to do something about it," Moone said. "We have to take off our own brand hats or our own brand egos and cooperate to make this a really meaningful experience for the consumer. We want to improve the consumers' understanding, appreciation and their adoption of the Internet lifestyle."
Kenney, now the president of the Internet Home Alliance, said many companies are developing innovative solutions and products, but the customer is left confused and unsatisfied by all the technology. This can create a crippling dilemma for the industry, he said.
"This market has a dilemma," Kenney said. "It's the kind of dilemma, which left unchecked, could stunt the growth of what this market has the potential to be. Two years can go by and we can look at this and we say, `We're still in base camp. We haven't brought forward great solutions to open up this market.'"
The adoption of broadband could help fuel growth in the home-networking market, said Jay Schrankler, vice president of Honeywell's Home Comfort and Systems business.
"We feel it's about to really take off, especially with the adoption of broadband," Schrankler said. "The adoption of broadband allows you to do a lot more to deliver services to the home. It is the key."
Steven Lee, vice president of home solutions for Best Buy, said two key technologies will forever change the landscape of home networking: broadband and wireless. "We have about 300 million visitors a year who buy 12 million connective devices every year," Lee said. "On top of that, we sign up a million-and-a-half people on the Internet. We have to make the Internet lifestyle as easy to understand, adopt and embrace as utilities, power and water."
The New Power Co., a company formed in April by Enron Corp., IBM and other investors, is working to do just that. Tim Vail, vice president of products and services for The New Power Co., said deregulation will provide opportunities for energy companies to enter the home-networking market. As one of the Internet Home Alliance founders, the Greenwich, Conn.-based company will be poised to offer Internet services to its customers, Vail said.
New homeowners need to be educated about structured wiring, so they will eventually view the Internet as one of the main utilities, said Kenney, the alliance president.
"This market will open up first in new home construction," Kenney said. "There are a million and a half new homes built a year. Sears feels very strongly that structured wiring needs to be a part of the new home buying decisions."
The structured wiring market will boom in the next few years, Kenney said.
"Fewer than 11% of new homes are built with structured wiring," Kenney said. "Our studies suggest that in three years, that number will be closer to 45%. Builders are figuring out that they need to future-proof their homes."
Companies are also figuring out that they have to work together, said Honeywell's Schrankler.
"No one of us could do this alone. If we were each to take our $2.5 million and go and spend it on marketing, there is no way that we could get the bang for the buck for the concerted effort."