Home networking.

As you move from your bedroom to the kitchen or the living room in the morning, radio frequency ID sensors start a chain reaction that gets gadgets in your home to start working. The lights and the air conditioning come on as you enter a room, and your radio or TV is automatically turned on to your favorite channel or station. By the time you reach the kitchen, the electric kettle has already boiled the water for your coffee, and your fridge has alerted the supermarket that you'll need more milk tomorrow.

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The future of the home is in the network and it is a Holy Grail that companies ranging from Cisco to Intel to Sony are pursuing. But if any country has a shot at leading the way, it is Korea.

Home networking is one of the nine key new technologies that Korea has earmarked. On the ground floor of the Ministry of Information and Communication's headquarters building in downtown Seoul is a "Ubiquitous Dream" exhibition hall that features a fully functioning and dazzling home network.

Home networks combine telecommunications, broadcasting, construction, appliances and software solutions together to link everything in a home and connect it with the rest of the world.

Sensors and chips embedded in devices around the home sense, process and exchange information to create the ultimate in convenience. "We are connecting everything around us," says Hyun Park, vice president of LG Electronics. "The goal is convenience as well as automated security features. Home networks help save money, manage energy and keep our home safe."

LG, a big manufacturer of home appliances, consumer electronics and communications products like cellular handsets, is a trail blazer in home networks. It is the first company in the world to commercialize products such as the Internet-enabled refrigerator, which can be connected through broadband and also acts as a home server or main gateway to the home network.

LG's $5,000 Internet fridge comes equipped with a 15-inch display, which can be used to watch TV, surf the net, download email, play music through its MP3 function or listen to satellite radio. It has video messaging built in and can keep track of the family schedule. You can record a video message for family members through a built-in camera and save several hours of messages on the fridge's storage--its hard drive. The appliance also keeps track of the amount of food inside the fridge, as well as key information such as "use by" dates for perishable products.

All the information can be accessed remotely from outside the home through a PDA, PC or even cell phone, much akin to what Nokia has experimented with in Finland. So if you are in a supermarket, you can dial into your refrigerator and find out what needs to be replenished.

Eventually, LG hopes, households will be able to automatically order whatever needs to be replenished. The Internet fridge works with sensor technology similar to that of RFID. As soon as a product with an RFID tag is put in the fridge, it records what's being put in on what day and even assigns it a color code to keep track of it.

Although home networking has great promise, there are challenges in commercializing it. One issue is that it lacks a killer app--something that people just can't live without. "Security could be the killer app in the home network," says Park. "You could watch your home on your 3G phone whether you are on the side of town or other side of the world. If an intruder came into my home while I was holidaying in China, my phone would beep and the local police station would be automatically informed." LG already has a small motion-detector sensor built in with some plasma TV models being sold in the U.S. If motion is detected outside your door, the TV switches on to the camera on your door and you get to see who is out there.

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Another issue, of course, is complexity. Existing homes need a home server or home gateway, as well as network-ready appliances that work together. "Our products use power line technology as communications channels to work together so you don't need wires to connect a fridge with a home theater or DVD player," says Park.

In other words, as long as these products work with electricity they will connect. The home server need not be a bulky desktop PC. "It could be a new Internet fridge or set top box, or home theater or DVD players, which have gateway features embedded, or a laptop that doubles as a home gateway," says Park. The price differential between ordinary appliances like a washing machine, for example, and a network-ready washing machine is less than $20. By next year, all but a handful of appliances that LG ships will be home network-ready.

For these reasons, the key place where home networks are catching on is in new residential complexes. Last year, 10,000 new apartments built in Korea were wired with ready-to-use home networks and 15,000 new apartments will be home network-ready complete with all the appliances this year. That's on top of tens of thousands of existing apartments that are being upgraded to be home network-ready. Some of the world's most sophisticated and advanced homes are being built in China right now. LG expects to install home network solutions in more than 2,400 apartments in Shenzen and Shanghai in China this year. Home network service is already in nearly half a million Korean homes in some form or another. That number is likely to increase to 10 million, or 60 percent of all Korean homes, by the end of 2007.

LG and arch-rival Samsung Electronics are working with Microsoft and Intel, which have identified digital smart homes and home network as key growth areas. The companies have teamed up to create the Digital Living Network Alliance, an industry cooperative. "We are hardware makers, Microsoft wants to sell software, and Intel wants to sell chips that we can use in our hardware," says Park. "Everyone is focused on making home networks a reality." By introducing the service ahead of Japan and the U.S., the impossibly ambitious Koreans hope to create billions of dollars worth of hardware and services sales a year.

Of course, home networking can't exist in a technological vacuum. It requires that the networks supporting it also are world class, which is why the Korean strategy of pursuing multiple technology initiatives at the same time is so important.

One of the key underlying technologies is broadband. "With broadband expected to grow strongly over the next three years, we believe that home networking will grow in proportion with the number of broadband-connected households in the years to come," says analyst Loo Jian Sern of IDC's Asia Pacific Enterprise Networks in Singapore.

Indeed, IDC says, as prices of network-ready products fall and more ordinary products are network-ready, home networking might reach what Andy Grove described as an "inflection point" as early as next year. Korea will be one place where it happens.

Korea hopes that the combination of government planning and robust private enterprise will result in major new growth opportunities such as these.