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Semiconductor industry

The Digital Home Takes Shape: Companies Invest in Advancements

Strategic Insights

— 1 min read

As the concept of the digital home gains momentum, technology vendors and private investors are making significant investments to capitalize on advances in networking, broadband, and mobile technologies. Companies like Intel and Cisco are acquiring and investing in startups that develop digital home technologies, with the goal of nurturing demand for advanced networking systems and equipment.

The digital home, an idea that has existed more as hype than reality since the mid-1980s, is now sparking activity among dealmakers. A major reason lies in how consumers are connecting to the Internet, with 26% of U.S. households expected to have broadband access by mid-2004, compared to 18% last year. Photographic film and analog music are largely giving way to digital files that can be downloaded and stored electronically. Even movies can be purchased and downloaded through services such as CinemaNow.

Key Takeaways:

  • Scott Smyers, vice president of Sony Corp. and chairman of the Digital Home Working Group, warns that the current state of home networking is only suitable for "hard-core enthusiasts," citing the complexity and difficulty of setting up a digital home network.
  • Companies like Intel and Cisco are acquiring and investing in startups that develop digital home technologies, with investments ranging from $200 million to $500 million.
  • Intel Corp. plans to invest $200 million in startups that develop digital home technologies, while Cisco Systems Inc. acquired Linksys Group Inc. for $500 million.
  • The Digital Home Working Group was founded by Intel and Sony to ensure a level of "interoperability" among technologies used to ferry high-bandwidth information around the digital home.
  • The group has published guidelines that prescribe a set of existing standards for particular parts of the digital home, with the first guidelines set to be issued in June.

Statistics:

  • By mid-2004, 26% of US households are expected to have broadband access, compared to 18% in 2003.
  • 3.5 million US homes already have personal video recorders, which can be used to record, pause, rewind, and replay digital programming.
  • The Digital Home Working Group has over 110 member companies.

Sources:

  • TheDeal.com
  • The Internet Home Alliance
  • Parks Associates
  • Intel Corp.
  • Sony Corp.
  • Cisco Systems Inc.

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