Mobility

November 16, 2006
Wi-Fi vendors licking their lips over consumer electronics

Geetanjali Babbar

NEW DELHI -- While consumer electronics today rely largely on physical media and on broadcast delivery of entertainment content, the market is in the midst of a major shift to a greater reliance on network-based delivery. Wi-Fi networking is expected to become a key enabler for delivery and redistribution of this content in the home, particularly for retail consumer electronics hardware.

With Wi-Fi appearing in mobile PCs, home routers, and phones, there has been much hype around Wi-Fi crossing over into the consumer electronics space. But the consumer electronics space is just warming up to Wi-Fi, with some device segments, such as gaming consoles and handheld games, welcoming Wi-Fi with open arms, indicated In-Stat, the market research firm.

According to the survey conducted by the Wi-Fi Alliance, Wi-Fi scores over a trip to Starbucks! Think Americans rely on their daily cappuccino to get them going? Not as much as they rely on their Wi-Fi. Nearly nine out of ten Americans surveyed said they would rather do without Starbucks for a year than give up their Wi-Fi connection (89 percent vs. 11 percent). Young hipsters are the most willing to give up their caffeine, with nearly 92 percent of respondents choosing Wi-Fi over Starbucks, versus just 77 percent of those age 40-49.

Embedded Wi-Fi fuels market growth

Michael Wolf, research director, ABI Research, said: "From the enormous interest in online gaming to the rapid emergence of new Internet distribution channels for top-tier movie and TV content, the need for connectivity in mainstream consumer electronics is growing rapidly. While the consumer Wi-Fi market has previously consisted largely of routers, gateways and adapters, ABI Research believes that as the market evolves toward digital distribution, its growth will be fueled by the inclusion of embedded Wi-Fi in consumer electronics."

The market today is led by portable gaming consoles, as both Nintendo and Sony have equipped their latest generation devices with Wi-Fi for multi player and online gaming. The new Zune from Microsoft signals the beginning of a large scale movement toward embedded Wi-Fi in portable media players, while camera vendors such as Nikon, Kodak and Canon have all embraced Wi-Fi in their products. Line-powered devices such as gaming consoles, DVD players and audio receivers are all expected to see high attach rates for Wi-Fi.

Philip Solis, senior analyst, ABI Research, added: "The development of a market for Wi-Fi-enabled consumer electronics has been hampered by technology limitations such as power consumption, but it has also been delayed by consumer electronics vendors' hesitation as they waited to see what would happen with 802.11n. With the 802.11n standard set to be ratified in a little over a year, the Wi-Fi Alliance's decision to certify solutions based on a draft 2.0 for 802.11n, and vendors' intentions to release products based on the current Wi-Fi protocols, this market is set for growth."

Gemma Tedesco, senior analyst, Networking Group, In-Stat, stated: “The beauty of Wi-Fi’s adoption into high-volume consumer electronics categories is that even single-digit attach rates can translate into millions of Wi-Fi shipments. For example, even with sub 10 percent attach rates expected for set top boxes and digital TVs in 2010, Wi-Fi-enabled shipments in these device segments are still expected to number in the millions.”

According to published reports, handheld game shipments with embedded Wi-Fi are expected to reach 28 million units in 2006, and gaming consoles with embedded Wi-Fi are expected to ramp up to approximately five million units by the end of 2006, driven by the fourth quarter release of Sony’s PlayStation 3 and Nintendo’s Wii. End of the day, 802.11n is likely to drive Wi-Fi uptake into core digital living room devices such as digital TVs and set top boxes.

Wireless-N: Providing hassle-free entertainment

Consumer electronics have been incorporating wireless technology into them for years. Linksys, a division of Cisco Systems, is the recognised global leader in VoIP, wireless and Ethernet networking, has been shipping networked DVD players and PVRs with wireless technology built in for about three years.

Chris Stevens, vice president, consumer market development, Linksys, said: "What will help consumer electronics devices more quickly integrate wireless technology is Wireless-N (802.11n)."

Wireless-N is the next generation of wireless standards put out by the IEEE. Its products are already shipping in draft form and Linksys is one of the companies shipping Wireless-N draft networking products today. Computer giants such as Dell, Apple, HP, Sony and Acer have already announced plans to ship notebook computers with Wireless-N draft built in. "As the chip sets become more readily available Linksys will also build wireless-N into its other networking and entertainment products such as print servers, storage devices, media adapters, game adapters and other entertainment devices," added Chris.

What makes Wireless-N most ideal for consumer electronic devices is that entertainment content such as video takes a lot of bandwidth to move around the house. For example high-definition video takes about 20MB to move a movie from the PC to your entertainment center. Wireless-N provides over 100MB of bandwidth speeds and four times the range performance over standard Wireless-G (802.11g). With Wireless-N, users can move video over their network as well as surf the Internet, move music, share files, print, talk on the phone using VoIP, all at the same time without experiencing an impact to quality of sound or sight. Wireless-N provides the simultaneous use of applications without the trouble of running out of bandwidth.

Win win situation for all

Given a slew of choices over technology and devices, the next obvious question would be: How should we expect the market to take off?

"Expect a steep growth curve," replied Steve Koenig, senior manager, industry analysis, Consumer Electronics Association (CEA). As the number of wireless home networks and commercial hotspots has grown, consumers have increasingly demanded greater wireless connectivity from their devices - both in the home and on the go. This means not only connecting to the Internet, but also linking devices for data transfer like pictures or music. Consumer electronics' manufacturers are responding in force. Adding Wi-Fi to their products builds-in greater utility and convenience – key differentiators in the competitive consumer electronics market place. The result is a win:win for consumers and manufacturers.

Chris Stevens explained: "They will take off first with tech enthusiasts and savvy network users. It will take time to educate consumers on what a wireless network can really provide and do for you. It takes time to educate users that they can move music to stereo from PC or talk on the phone using VoIP or can move downloaded movie onto the TV through a media adapter. However, by developing consumer electronics that are fun to use and are seamless with other devices throughout the house will help attract the consumer to try it out."

Key growth enablers

Content, user experience and seamless integration with other devices on the network would drive the market, stated Chris Stevens. Content is key as it provides services to be enabled on the device such as movies, music, voice, etc. User experience is just as important for the products must be fun to use and enhance ones lifestyle. It has to add value and benefits to the users. Integration with other devices on the network is equally important for they must work with the PC, TV, printer, camera and all the other devices that users want to attach to the network. "Ease of use and affordability will play a crucial role in further pushing the growth," he added.

However, Andrea Wood, lead analyst, Jupiter Research, added the approval of 802.11n as a standard will trigger the growth of W--Fi in consumer electronics. Along with this, availability of state-of-the-art broadband equipment and appealing services, ease of use, and consumer interest in these applications will fuel the market growth.

Gemma also indicated similar drivers for growth. According to her, decreasing price of Wi-Fi modules and the success of 802.11n in providing 50Mbps of throughput that can be maintained steadily throughout a 3,000 ft house will set the stage on fire. In addition, the adoption of Wi-Fi by a major players will drive the specific market segment to adopt Wi-Fi on a wider basis.

To conclude, the rising tide of consumer demand for wireless connectivity is the largest driver of growth here. Eventually we may see Wi-Fi become a convergence feature much like MP3 playback and digital cameras have become.

Roadblocks to success

Currently, getting the IEEE to finalise the Wireless-N standard is the biggest challenge. It is not expected to be finalised until late 2007 or early 2008. Some consumers may be reluctant in purchasing a draft standard and some vendors are still waiting for the final standard to be ratified before they embed into their devices. "However, the benefits for faster speed, more range and the bandwidth to enable multiple application simultaneously is a benefit that customers want today," said Chris Stevens.

According to Ina Sebastian, associate analyst, Jupiter Research, pricing and lack of end-to-end solutions are some of the inhibitors for adoption of entertainment over Wi-Fi.

Gemma summed it up as 'power drain, throughput and quality of service'. In markets where wireless video distribution is key, 802.11g, 802.11b and 802.11a really have not been able to cut it in most cases. Throughput and range limitations, as well as poor to mediocre QoS for multimedia, have hampered Wi-Fi's adoption, mainly because Wi-Fi was really designed to be a wireless Ethernet technology that carries data. The proliferation of Wi-Fi in mobile PCs, homes, though, have really driven an interest in making Wi-Fi better suited to carry multimedia. The fact that it's cheap is attractive as well!

802.11n is really still very immature, but there is hope that this standard can propel Wi-Fi into being embedded into high volume stationary consumer electronics devices. The flexibility of the 802.11n standard was built to accommodate portable consumer electronics devices and phones, allowing for more limited implementations of 802.11n due to power and cost considerations. Also, even for audio implementations in digital music players, for instance, there has to be a solid commitment from the vendor to implement a Wi-Fi module in a way that adds value to the user experience. This involves software development on top of the standard Wi-Fi.

Wireless USB is a competitor in device segments that need wireless mainly for a USB cable replacement, like digital video camcorders. Devices having USB ports, such as digital cameras, printers and multi-function peripheral devices, are likely to adopt wireless USB. And, the first few implementations of Wi-Fi in digital cameras have not really been that stellar.

The growth limitations may be more policy-related than technical at this stage. According to CEA, the availability of Wi-Fi devices and service is needed to encourage broadband deployment, which will provide enormous benefits to consumers. However, security issues and other restrictions surrounding Wi-Fi access points could impede mass market growth of Wi-Fi-enabled consumer electronics.

Will the pricing affect?

Although it has limited range and throughput, Wi-Fi has increasingly been embedded into devices because it keeps getting cheaper and better. Also, the increase in laptops in business and in the home has really propelled Wi-Fi as an easy way to share an Internet connection wirelessly. Wireless USB is a competitor, but that's a personal area networking (PAN) technology, not a LAN technology, and this gives Wi-Fi an edge over this!

As per Andrea Wood, ease-of-setup and pricing will be two major components for adoption of high-bandwidth entertainment over Wi-Fi.

For example, 27 percent of broadband users have not adopted high-bandwidth applications because of cost. Thirty-eight percent of broadband consumers earning US $35,000 or less per year report price as the major inhibitor to owning an entertainment network, compared with 20 percent of broadband consumers earning US $100,000 or more per year who say price is an inhibitor to ownership. In general, when we asked Wi-Fi network owners about their priorities when they purchased their recent Wi-Fi equipment, lowest price was one of the major decision criteria.

With Wi-Fi implementation ramping up across several consumer electronics product categories and hundreds of new access points coming online everyday, price competition among component suppliers should be fierce.