MARKET RESEARCH.

Nearly 10 Million US Homes Will Be Digitally Remodeled During The Next Four Years

According to research from the Yankee Group, as many as 10 million US homes will undergo digital remodeling by 2003, ushering in the era of the networked home. "The networked home is the point of digital convergence; the place where consumers are realizing the benefits of appealing new applications and content," says Boyd Peterson, vice president of the Yankee Group. "Today, this means consumers can access the Internet from anywhere in their homes; but soon familiar products like telephones, stereos and televisions will take on a whole new life."

Currently, about 650,000 US homes have some form of networking installed. The Yankee Group projects that number will jump to 10 million by 2003, reflecting a compound annual growth rate of 95 percent over the next four years. Consumers are ready for the digital home, according to Yankee Group's 1999 Networked Home Survey, a new report on consumer behaviors, preferences and adoption of home networking technology, which shows more than 17 million US households are already interested in home networking.

"The networked digital home is becoming a reality now because we finally have compelling applications, affordable, unobtrusive networking technology, and consumer demand," says Peterson.

Yankee Group analysts also believe the rapid growth of high-speed broadband Internet access services will serve as a critical catalyst to the explosive growth of home networking because broadband Internet brings with it the need to share access among multiple PCs and to deliver Internet and multimedia content to many different devices and locations within the home. This generates instant demand for home networking solutions.

The proliferation of new web appliances like MP3 recorders, and the promise of digital television and IP (Internet Protocol) telephony services delivered over the same networks will further increase the demand for home networking solutions.

"1999 has been a watershed year for the home networking industry," says Karuna Uppal, a senior analyst at Yankee Group. "Advancements in home networking standards and product availability have moved home networking technology from the laboratory to the living room."

Yankee Group researchers believe the digital remodeling of US homes will occur rapidly because many of the newest options require minimal physical installation. In fact, much of this technology will simply be embedded directly into familiar consumer devices like PCs and televisions.

Of the almost 10 million homes expected to have networking solutions by 2003, Yankee Group predicts the majority of these will be employing PC- based networking. More than four million PC-based homes will install phone line-based networking over existing wiring, while nearly 1.5 million homes will use wireless networking technology and about 300,000 homes will use power line networking that works over existing electrical wiring. By the end of 2003 Yankee Group also predicts the home networking market will be fueled by an estimated five million broadband homes that will have residential gateways installed -- devices which route IP traffic and provide data management and security.

"Simple home networking solutions and new protocols that link devices within the home will be at the heart of a technology evolution for consumers," says Craig Mundie, senior vice president of Microsoft. "Home networks that run on existing wiring and new wireless links will connect many types of digital devices in the home, providing them with a wide range of multimedia content and services from the Internet."

Three-Fold Increase In Online Banking Expected Over Next Five Years

The number of US households using PC banking applications is projected to more than triple in the next five years, from seven million at the end of 1998 to more than 24.2 million by 2004, according to the Dataquest Inc. unit of Gartner Group Inc. Approximately 57 percent of these -- about 13.7 million households -- will be paying bills online in 2004.

"To promote growth in these online activities, banks and other financial institutions face two primary challenges," says George Barto, senior industry analyst for Dataquest's The Interactive Home: Financial Services US program. "They need to widen the overall appeal of online banking and overcome consumer unease about control of the online bill paying process."

Online banking households are not typical of the potential mass market; they differ not only in terms of household composition and income level, but in terms of bill payment habits as well, Barto says. Dataquest research shows that current consumers who bank online are largely those whose time is at a premium -- well educated households with high, dual incomes and children. "Anytime access," was cited by 86 percent of current online banking consumers as the prime motivators for establishing an online banking account.

Moreover, among online households, the male head of household typically pays the monthly bills. Among households in general, the female head of household is usually the monthly bill-payer. If banks are to widen the appeal of online services and migrate them into more mainstream households, Dataquest says they must demystify the entire online process while allaying fears of paying bills online. Consumer behavior is difficult to change, but banks are beginning to get help in this effort from other quarters, most notably from organizations such as credit card companies, stores, telephone companies, and utilities that require regular monthly payments.

"Many of these are offering account viewing for their customers. Once it becomes familiar behavior, consumers will have less trouble making the transition from viewing to transferring money among accounts and then to bill paying," Barto says. "The process will be further demystified as digital TV and digital cell phone banking applications become available."

Dataquest estimates the average fee for online bill payment services is $6.20 a month, but notes that only about half of all online bill paying customers actually pay. Some banks offer the service free, and others waive the fee for preferred customers. The average fee for account viewing stands at about $5.10 a month. The number of banks with a formal fee schedule is declining. Only about 20 percent of banks have a fee schedule, and only about 10 percent of account viewing households actually pay. Fees from all account view and bill payment services are forecast to reach $1.3 billion by 2003.

CIOs Project Continued IT Hiring In Fourth Quarter

Chief information officers (CIOs) anticipate steady demand for information technology professionals in the next three months, according to RHI Consulting's quarterly Information Technology Hiring Index. Twenty-three percent of CIOs plan to hire additional personnel in the fourth quarter of 1999, while just two percent anticipate staff reductions. Seventy-three percent of CIOs forecast no change in their current hiring levels, up from 65 percent in the previous quarter. The net 21 percent increase in hiring is down seven points from the third quarter but in line with the pattern seen late last year.

The national poll includes responses from more than 1,400 CIOs from a stratified random sample of US companies with 100 or more employees. It was conducted by an independent research firm for RHI, a firm that provides IT professionals on a project basis.

"As companies expand operations and increase their technology investments, demand for the skilled professionals required to implement new IT initiatives will remain strong," says Greg Scileppi, executive directory of RHI Consulting.

Addressing the seven-point decline, Scileppi notes that during the same period last year CIOs projected a similar decrease in hiring compared to the previous quarter. "In addition to seasonal patterns, the drop could be the result of a hold on new IT initiatives until after the completion of Y2K date conversion projects."

Scileppi says that due to the increased use of Internet and intranet applications, including e-commerce and customer support management systems, there is growing need for experienced professionals to support these technologies. "Help desk technicians, Web architects and network engineers, among others, are in strong demand nationwide."

Asia/Pacific Printer Shipments Reach 2 Million Units In Second Quarter Of 1999

The Asia/Pacific (excluding Japan) printer market experienced moderate growth in Q2 1999, according to market research firm International Data Corp. (IDC). Total printer shipments passed the two million mark for the first time in the region while recording a growth of 25 percent quarter-on-quarter and more than 10 percent sequentially. China, Korea, and Australia remained the three largest printer markets in the region, representing 60 percent of the region's total printer shipments in Q2 1999.

China led all other countries with a 26 percent share, with Korea trailing behind with a 22 percent share. Australia maintained the third position, taking a 12 percent share. The inkjet segment continued to lead the total printer market with a share of 70 percent.

"Declining prices contributed greatly to the inkjet growth in the past, but price reduction in the inkjet market has slowed down in the last few quarters," says Martin Chau, senior analyst at IDC Asia/Pacific. "The average end-user price dropped by only three percent from $198 in Q1 1999 to $191 in Q2 1999. Not only are inkjet printers popular in the home market, they are also highly in demand in small business environments. When occasional color printing is required, most of the companies in the small business sector would prefer inkjets over color lasers due to lower acquisition cost."

With strong demand coming from both consumer and commercial markets, the inkjet segment achieved 13 percent growth in Q2 1999. The market was dominated by the sub-$150 segment with a 44 percent share. Models in this category included Canon BJC-255sp, Canon BJC-256sp, Canon BJC- 4310sp, Epson Stylus Color 300, Stylus Color 440, HP Deskjet 695C, and Lexmark 1100 Color Jetprinter. These entry-level inkjets were consumed largely by first-time printer buyers (in the home market) and were also commonly offered in various PC-plus-printer bundling programs.

Total laser shipments grew slightly from 0.26 million units in Q1 1999 to 0.28 million units in Q2 1999. Within the laser segment, monochrome 8-10 ppm was the largest category with a 42 percent share. However, monochrome under 8ppm remained the largest category in the "less- developed" countries (which include China, India, Indonesia, the Philippines, and Malaysia) where low-priced and low-speed models were favored.