Home Networking at the Crossroads
TDG Finds Home Network Diffusion Slowing
as Connected CE Set to go Prime Time
September 22, 2010 (Frisco, TX) – According to TDG, home network penetration has stalled at around 40%, suggesting that the market has prematurely become replacement-driven by upgrades, driven less and less by home network sales will be driven primarily by replacement purchases, not first-time buyers - a discouraging sign for the digital home market.
TDG’s new report, Familiarity, Use, and Demand for Home Networks: 2010, contends the home networking industry is at a crossroads. As TDG founding partner Michael Greeson notes, “The pool of likely first-time buyers is drying up at the same time the “connected CE” market is finally heating up.”
Traditionally, these are characteristics of a saturated market, a time during which the number of new buyers dwindles as replacement purchases dominate. In the case of home networks, diffusion is around 40% of all broadband households, holding steady since 2008. "Not only is this far short of expectations, but it portends of a crisis in the digital home industry in general and the connected CE industry in particular."
Home network OEMs, retailers, and operators have long relied upon consistent broadband diffusion as a lynchpin for sales. Where broadband went, so too did home networking. Unfortunately, this notion holds true in both directions: when broadband diffusion stalls, so too will home network uptake.
This logic is validated by TDG’s new research. For example, at a retail price of $75, only 13% of non-owners are highly likely to purchase a new home network in the next six months, a dismal insight. “The entire home network value chain should pay attention to these findings,” continues Greeson.
In this environment, home network sales must come from current broadband users that have no home network. The problem: most of these consumers have no interest in buying one.
Some 87% of non-networked broadband heads-of-household are not interested in buying a home network. Among this segment:
- 16% have never heard of home networks;
- 46% have heard of home networks but are not very familiar with them;
- 34% are familiar with home networks but do not own one; and
- 5% previously owned a home network but no longer do.
"Awareness per se is not an issue," notes Greeson. "The question is the extent of awareness. Most non-owners have little idea of the benefits of home networking meaning this is pure and simple a marketing challenge."
"To address this challenge, OEMs, retailers, and broadband operators must take a step back from 'technology' (a message that targets early adopters) and instead speak to the how these technologies can be put to use and the benefits they deliver (a message that targets mainstream consumers). Owning a home network at some point becomes a structural necessity - whether consumer-purchased or operator-provided, convincing consumers of this fact is imperative."
These and other insights are featured in TDG’s latest report, Familiarity, Use, and Demand for Home Networks: 2010, an extensive study of both networked and non-networked broadband heads-of-household. For more information about this new research, please visit www.tdgresearch.com or contact our Research Services Team at 469-287-8050.
About TDG: TDG provides actionable intelligence on the quantum shifts impacting consumer technology and media behaviors. Since 2004, our market research and advisory services have helped technology vendors, media companies, and service providers understand how consumers access, navigate, distribute, and consume broadband media - whenever and wherever they may be.
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