As noted by Geoffrey Moore in Crossing the Chasm (1991), the initial customer set for new technology products consists primarily of innovators and early adopters. The innovators or technology enthusiasts are the first to realize the potential in the new product, but the early adopters or visionaries dominate the buying decisions in the market.
This graph shows the distribution of consumer segments based on self-identified technology adoption in late-2000 and late-2003. Despite the influx of new home technology in the interim, the incidence of these consumer segments remains stable.
Electrons Neutrons Protons Nuclei Very negative towards connected home Very positive towards connected home - +/- + ++ Electrons - Like the negatively-charged particles of an atom, this segment is hostile to the notion of the connected home. Neutrons - Just as the name suggests, this segment is largely neutral towards the connected home. Protons - This segment is mainly positive about the connected home, though not as enthusiastic as the next and most promising segment. Nuclei - This segment represents the most likely adopters of the connected home. Like the nucleus of an atom, they are the positively-charged core market. The term ‘primary market consumers’ in this report refers to a combination of the two most promising segments: the Nuclei and Protons. This combined segment represents about 42% of single-family, owner-occupied households in the US and is profiled in the Appendix.
Internet Home Alliance Consumer Segmentation Nuclei 17% (10.6 million households) Protons 25% (15.5 million households) Neutrons 10% (6.2 million households) Electrons 48% (29.9 million households) US Home Ownership, Q4 1998 (US Census) 62.2 million Single-Family, Owner-Occupied Households
Primary market consumers are significantly more likely than mass market consumers to own any of the computing and related devices listed, with the exception of a Web or media tablet.
Ownership of a number of items appears to be correlated with income. The higher their annual household income, the greater the likelihood that consumers will own a laptop or notebook computer, a wireless keyboard, a wireless mouse, a laser or multi-function printer, and a home fax machine.
(Total n=1,919; Primary Market n=1,008; Mass Market n=911; Q21) Desktop PC Laptop Wireless Keyboard Wireless Mouse Printer Inkjet Printer Laser Printer Multi-function Printer Computer Game Controller Fax Machine Joystick Game Pad Computers & Peripherals Owned
About two-in-three consumers are ‘somewhat’ or ‘very familiar’ with the concept of a home network (65%).
Primary market consumers are significantly more likely than mass market consumers to be ‘somewhat’ or ‘very familiar’ with the concept (76% vs. 57%, respectively).
Consumers aged 25-44-years-old are significantly more likely than older consumers to be ‘very familiar’ with the concept.
Familiarity with home networking appears to be correlated with income as well. Consumers with annual household incomes of $100,000 or more are significantly more likely than those who make less than $50,000 to be ‘very familiar’ with the concept.
(Total n=1,914; Primary Market n=1,008; Mass Market n=907; Q39) Familiarity with Home Network Concept Total Primary Market Mass Market
About two-in-five single-family, owner-occupied households with Internet access in the U.S. have two or more PCs, allowing for the possibility of home networking.
About 12% of consumers claimed to have a home network, defined for the purposes of this research as “ …a connection between two or more computers or Internet appliances in order to exchange data across one or more rooms of your home and/or to share a connection to the Internet or other digital services. Please note that the following connections do NOT qualify as home networks: connections between a single computer and a printer, even if the devices are in separate rooms; and connections between one or more computers and portable devices like PDAs, and digital cameras.”
This estimated adoption figure comes close to the 10% estimate issued by In-Stat/MDR in February 2003. According to this firm, home networking gained in popularity among all demographic groups in 2002, jumping 2% from 8% of US households in 2001.
The difference between our estimate and that of In-Stat/MDR is explained, in part, by the fact that our sample consisted only of single-family, owner-occupied households, while In-Stat/MDR included renters. We would expect a larger share of home owners than renters to have a home network.
Home network ownership, while still most popular among innovators/early adopters, is starting to gain ground among members of the early majority.
As might be expected, consumers with broadband at home are more likely than their dial-up counterparts to have a home network (25% vs. 3%, respectively).
Demographically, home network owners are more likely to be 25-54-years-old (with the highest concentration of owners in the 25-34 age bracket) than 55-years-old or older.
Two-parent households and couples with children are more likely than other household types to own a home network. Part of this correlation is explained by household income. These households generally have more discretionary income than singles or single parents.
Accordingly, households with annual incomes of $50,000 or more are significantly more likely than those with lower incomes to own a home network.
(Total n=440; Primary Market n=310; Mass Market n=157 Q40) * Respondents were provided the following definition of a home network: “By the term ‘home network,’ we mean a connection between two or more computers or Internet appliances in order to exchange data across one or more rooms of your home and/or to share a connection to the Internet or other digital services. Please note that the following connections do NOT qualify as home networks: connections between a single computer and a printer, even if the devices are in separate rooms; and connections between one or more computers and portable devices like PDAs and digital cameras.” Current Ownership Total Primary Market Mass Market
As might be expected given the immaturity of the market, most home networks consist primarily or solely of basic components—PCs, routers, hubs and printers.
Males are significantly more likely than females to have entertainment or household management functions integrated into their home network. For example, about 16% of males reported an integrated security system compared to only about 4% of females.
No other notable significant differences emerged based on demographics.
Self-described innovators/early adopters are significantly more likely than members of other technology adoption segments to have a television connected to their home network, and/or substantial home automation functions.
(Total n=238; Primary Market n=195; Mass Market n=67; Q42) Device Part of Home Network Computer Printer Router Hub Security System Stereo Television Home Automation System Other
There is a perceived lack of need among the majority of those who don’t currently have a home network. This finding indicates a dearth of compelling bandwidth-hungry applications and/or the need for further consumer education about the benefits of home networking.
Mass market consumers are significantly more likely than primary market consumers to cite lack of need as the primary reason they don’t have a home network (69% vs. 44%, respectively).
By the same token, consumers with dial-up are significantly more likely than those with broadband to report a lack of need as the main reason they don’t have a home network (66% vs. 52%, respectively)
Other concerns, such as associated cost and the apparent complexity of set-up are relatively marginal issues.
(Total n=481; Primary Market n=255; Mass Market n=227; Q46) Main Reasons Against Ownership No Need Cost Complexity of Network Setup Other Complexity of Tech Choices Uncertainty About Info. Source
At this point, most home network owners appear content to pursue established home networking activities.
The area of home networking that may see the greatest growth is home automation. Only 5% of home network owners currently access home automation functions via their network, yet 29% have an interest in doing so in the next 12 months.
Interest in home automation was followed by interest in an Internet-linked home security system. Only 7% of home network owners have such a system today and 21% expressed an interest in using one in the next 12 months.
Other areas of interest include: recording broadcast TV programs on a PC to watch on a TV or PC at a later time (18%), viewing PC video on a TV (15%), accessing Internet streaming audio via a stereo system (14%), and accessing PC applications via an in-home portable device like a tablet PC (12%).
Home Networking (Total n=238; Primary Market n=195; Mass Market n=67; Q44) Current Uses Share Internet Access Across PCs Share Access to Peripherals Share Electronic Files Across PCs View PC Video on a TV Play Multi-player Games/Multiple Devices w/in House Listen to PC Music Files on Stereo Access Internet Streaming Audio via Stereo Play Online Games via a Game Console Internet-linked Home Security Record TV Programs on PC Other Access PC Applications via In-home Portable Device Home Automation Current Uses
Home Networking Future Uses Home Automation Internet-linked Home Security Record Broadcast TV on PC Listen to PC Music Files on a Stereo Access Internet Streaming Audio via Stereo View PC Video on TV Access PC Apps via an In-Home Portable Device Share Access to Peripherals Play Multi-player Games/Multiple Devices w/in House Play Online Games via Game Console Other Share Internet Access Across PCs Share Electronic Files Across PCs Future Uses (Total n=238; Primary Market n=195; Mass Market n=67; Q44) Interest in None
Home Networking (Total n=353; Primary Market n=264; Mass Market n=116; Q52)
Practical, work-related needs continue to be the primary driver of home network ownership, although more and more consumers are citing entertainment and household management needs as rationales. This trend bodes well for expanding the concept of home network to include functionality traditionally associated with consumer electronics and, in the case of household management, merely mechanical devices.
Primary market consumers are significantly more likely than mass market consumers to cite ‘streamlining routine household tasks’ as the main reason they’re interested in setting up a home network (26% vs. 16%, respectively).
Consumers with children at home appear to be more likely than those without children at home to report that ‘streamlining routine household tasks’ is the most compelling rationale for setting up a home network.
Main Reason for Adoption Improving Work Productivity at Home Expanding Entertainment Options Streamlining Routine Household Tasks
Home Networking Interests & Options Integrated Network As part of this study, we asked consumers to indicate which one of three types of home networks they preferred, if any. The three types we evaluated consisted of: Point-to-point networks--networks consisting largely of single room, discrete PC-to-device applications; Distributed networks—networks comprised of multi-room, ecosystem-oriented applications; and Integrated networks—networks made up of multi-room, cross-ecosystem applications. Each type of network represents an increasing level of sophistication. Our working hypothesis was that primary market consumers would gravitate toward distributed and integrated networks, while mass market consumers would lean toward point-to-point networks as a relatively low-risk means of enjoying some of the benefits of home networking. Primary market consumers did, indeed, tend to prefer distributed and integrated networks; however, mass market consumers expressed little interest in any type of network and those who did were divided in their preferences. Distributed Network Point-to-Point Network
Among those interested in one or more types of home networks, a plurality would most likely adopt a distributed or integrated home network if cost were not an issue.
The total addressable market (TAM) for each of the three types of home networks is small, consistent with the relative immaturity of the market overall. The TAM represents the maximum percentage of single-family, owner-occupied households in the U.S. that would take a strong interest in one of the three types of home networks. It assumes perfect awareness and distribution.
(Total n=1914; Primary Market n=1008; Mass Market n=907; Q62/Q63/Q64) Estimated TAM Likely Adoption by Segments Total Primary Market Mass Market 1% 1 % 1 % Mass Market 11 % 6 % 2 % Primary Market 5 % 3 % 2 % Total Market Integrated Network Distributed Network Point-to-Point Network Segment
Home Networking Preferences Integrated Networks Main Reason for Adoption by Segments Convenience/ Ease of Use Cutting Edge Improve Working from Home Entertainment Streamline Current System Remote Access Appealing Central Admin/ Device Control Increased Security Useful/Sounds Good Share Technology Other Good Replacement Increase Productivity Main Reason for Adoption by Segments (Total n=165; Primary Market n=192; Mass Market n=9; Q64A) Multiple/Concurrent Net Connection
Home Networking Preferences Integrated Networks Main Reason for Adoption by Network Ownership Convenience/ Ease of Use Cutting Edge Improve Working from Home Entertainment Streamline Current System Remote Access Appealing Central Admin/ Device Control Increased Security Useful/Sounds Good Share Technology Other Good Replacement Increase Productivity Main Reason for Adoption by Network Ownership (Total n=165; Primary Market n=192; Mass Market n=9; Q64A) Multiple/Concurrent Net Connection
Home Networking Preferences Integrated Networks
Among consumers initially interested in an integrated home network, about half cited a lack of need or interest as their main reason for saying they wouldn’t ultimately adopt one, even if price weren’t an issue. As in the case of the distributed network, this finding points up the limitations of consumers’ current perspectives on home networking. With the possible exception of the entertainment ecosystem, the three ecosystems of interest aren’t sufficiently mature enough for consumers to understand the benefit of connecting them. Our working hypothesis is that only after the ecosystems, particularly, the family ecosystem, are firmly established, will most consumers begin to consider the possibilities inherent in bridging them.
(Total n=87; Primary Market n=68; Mass Market n=27; Q64C) Main Reason Against Adoption by Segments Don’t Need/ No Interest Too Expensive/Cost Sounds Too Complicated Not Enough Time/Too Busy Other Home Issues Current System Sufficient Other
Home Networking Preferences Integrated Networks
By far, consumers would prefer to see a home computer or server as the central ‘brains’ behind an integrated network over an interactive entertainment system (essentially, a sophisticated videogame platform) or an advanced set-top box.
(Total n=307; Primary Market n=310; Mass Market n=48; Q75) Appeal of Hub Devices by Segments Total Primary Market Mass Market Mean Score 8.4 6.3 5.3 8.5 6.5 5.6 7.6 5.0 4.0
In the final analysis, primary market consumers are willing to pay, on average (mean), about 53% more than mass market consumers for an integrated network.
Network sophistication appears to be correlated with dollar value. Consumers are willing to pay, on average (mean), about 43% more for a distributed network than for a point-to-point network and about 22% more for an integrated network than a distributed network.
This pattern indicates that a fully-featured connected home would generate, on average (mean), maximum acceptable costs of less than $1,495.
Internet Home Alliance Ecosystem Framework Cellular Network Mobile Home Notebook VoIP Phone Web-based Services Automotive Multifunction Printer Career Personal Entertainment Hotspots Gaming Home Video Distributed Audio PVR/STB Television Media Center PC Home Theater Cell Phone Mobile Gaming Audio Players Notebook Internet White Goods Small Appliances Bridge Family Security System HVAC Web Camera Broadband Access
Yahoo! Calendar is a full-featured, Web-based personal calendar available free of charge to registered Yahoo! users. With Yahoo! Calendar, you have convenient access to a user-friendly contact and meeting management service anywhere from any device with a connection to the Internet, including PCs, PDAs, and mobile phones.
Among all of the family ecosystem products/ services tested, this one garnered the highest estimated take-rate—10%.
Interestingly, 21% of those who indicated they will probably or definitely use the service reported that they already do so.
Consumers with children at home appear to be more likely to adopt this service than those without children at home. For instance, about 19% of single-parents with children are likely to use this service compared to only 8% of singles without children.
The most popular rationale for using the service is the fact that it’s free (37%).
About one-in-two unlikely users cited they had no interest or need for the service (50%). Another 35% said they already use an electronic calendar of some kind. Relatively few mentioned security as a concern (8%).
Family Ecosystem: Consumer Interests Family Calendar Example (Q87) Yahoo! Calendar Adoption SEGMENTS Total (n=640) Primary Market (n=329) Mass Market (n=311) NETWORK OWNERSHIP Owner (n=102) Non-Owner (n=536) NETWORK SOPHISTICATION Basic (n=23) Advanced (n=43) Expert (n=36)
Overall interest in improving work productivity at home: 15% (total); 25% (primary market); and 8% (mass market).
Overall interest in improving work productivity on the road: 11% (total); 18% (primary market); and 5% (mass market).
10 (13%) 10 (9%) Public Transit ETA 8 (24%) 9 (16%) Scheduling: Colleagues/Clients 7 (27%) 8 (17%) Group Collaboration 9 (23%) 7 (20%) Dynamic Commuting 5 (31%) 6 (20%) Com: Colleagues/ Clients 4 (31%) 5 (21%) Scheduling: Family/Friends 6 (29%) 4 (22%) Career Training 3 (36%) 3 (26%) Remote Access: Co. Files 2 (40%) 2 (28%) Remote Access: Business Email 1 (44%) 1 (30%) Communication: Family/Friends Primary Market Rank / Top-3 Box Total Market Rank / Top-3 Box Career Interests
Entertainment Ecosystem: Consumer Interests Media Interests
Overall interest in home media entertainment: 30% (total); 46% (primary market); and 19% (mass market).
10 (8%) 10 (6%) Online Games 8 (14%) 9 (9%) Console Games 7 (14%) 8 (12%) Books on Tape 9 (15%) 7 (15%) Radio Broadcast Talk 5 (20%) 6 (16%) Personal/Home Video 4 (26%) 5 (22%) Radio Broadcast Music 6 (28%) 4 (23%) Personal Home Photos 3 (35%) 3 (30%) Recorded Music 2 (42%) 2 (31%) Theatrical Movies 1 (51%) 1 (40%) Broadcast TV Primary Market Rank / Top-3 Box Total Market Rank / Top-3 Box Media Interests
Consumer Opportunities Career Family Entertainment 2003 2005 2007 Security System HVAC Appliances Program. Thermostat Communicating Thermostat Lighting Control Smart Appliance Online Grocers Inventory Mngmnt Health Advice Office Visits Telemedicine RFID Tagging Security Monitoring Energy Management Appliance Monitoring Metabolism Monitoring Personalized Medication Mealtime Dynamic Routing Telematics Voice Office Wireless LAN CBT Training Web Conferencing Internet Enhanced Education Classroom Training Automobile Server VoIP Application Sharing Video Conferencing Blackberry Live Distance Learning WiFi Phones Instant Messaging Online PC Gaming Gaming Consoles Movie Downloads Mobile Players PVRs Home Jukebox PC Network Music Library Home Media Server Online Gaming Network PVR Music Subscriptions Music Downloads Media Bridges HDTV Digital TVs VOD DVD P2P Home Theater Big Screen TV