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Digital Home WiFi Enabled Devices: Global Market

Forecast and Outlook

Connected Home Devices Service

Peter King, pking@strategyanalytics.com

Forecast and Outlook Snapshot

Consumer adoption of laptop PCs, portable and fixed games consoles are the major drivers

in a 134 million unit wireless home device market in 2007. As wireless connectivity begins

to penetrate the TV and mobile device space, unit shipments will grow at an impressive

clip, exceeding 500 million units by 2012. Key issues surrounding the technology remain,

however, and will need to be addressed if WiFi is to realize its full potential: that of a

dependable, easy-to-use and ubiquitous utility. Drawing upon Strategy Analytics' 30-year

history of tracking global analogue and digital consumer electronics markets, as well as

interviews with leading wireless technology and device vendors, this report provides

detailed global and regional forecast models for most of the major emerging wireless homedevice segments. It accompanies a forecast data table, "Digital Home WiFi Enabled

Devices Global Market Forecast Datatable".

July 07

1 Executive Summary

Consumer WiFi access options continue to increase: the result of a combination of growing in-home

wireless router penetration and the continued emergence of public WiFi hotspots. In response to this

trend, manufacturers are releasing an increasing number WiFi enabled consumer devices into the

marketplace.

Global sales of wireless home devices will reach 133.7 million units in 2007, an increase of 70% on 2006.

As wireless connectivity begins to penetrate the TV and mobile device space, we expect growth in 2007

to increase to 62%, leading to sales of 217 million units. Annual demand will exceed 500 million units by

2012, and cumulative sales of wireless home devices over the next five years will reach 2 billion units.

PCs and game consoles (both fixed and portable) represent the majority of in-home wireless devices,

with dual-mode cell phones, portable MP3 players and digital still cameras (DSC) quickly picking up pace.

In 2007, PC and fixed TV devices made up 54% of the total global WiFi-enabled device market. As WiFi-

enabled cell phones become more pervasive, this number will fall to 46%. While WiFi TV today represents

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only 0.2% of the global WiFi device market, as improving WiFi standards emerge, this segment will grow

to almost 5% by 2012.

Key questions persist, however, with respect to actual usage. The widening availability of WiFi-enabled

devices does not necessarily mean that consumers are actually using these devices as intended (i.e, with

WiFi).

Interoperability certification for high-performance Wi-Fi Certified 802.11n draft 2.0 products equipment

is now underway. Today's Trimode (802.11a/b/g) WiFi technologies are adequate for many wirelesshome applications, but improvements offered by MIMO/N will be needed to support the high quality

video streaming capabilities demanded by wireless TV and video devices. Our model indicates that

demand for MIMO and 802.11n devices will reach 258 million units a year by 2012, primarily driven by

PCs and wireless TV devices.

To achieve its potential, Wi-Fi must transition from its role as the pre-eminent technology for building

general-purpose wireless networks into a dependable, easy-to-use and ubiquitous utility. Otherwise, it is

in serious danger of remaining a productivity tool rather than an entertainment tool. Under that

scenario, certain players in the digital home ecosystem will miss out on the opportunity to create a new

breed of consumer devices, leaving those who understand consumer user interfaces (UI) to take an early

market lead.

Drawing upon Strategy Analytics' 30-year history of tracking global analogue and digital consumer

electronics markets, as well as interviews with leading wireless technology and device vendors, this

report provides detailed forecast models for most of the major emerging wireless home device

segments. It accompanies a forecast data table, "Digital Home WiFi Enabled Devices Global Market

Forecast Datatable".

Subscribers wishing for further commentary on these issues should contact the analyst team. Details are

available in section 5

1 Executive Summary2 The Wireless Digital Home

2.1 Overview2.1.1 The Good2.1.2 The Bad2.1.3 The Ugly

2.2 Methodology and Approach3 Recent Developments in the Wireless Home Ecosystem

3.1 Modelling the transition to next-generation WiFi3.2 TV Centric Devices

3.2.1 Recent Developments in Wireless TV3.2.1.1 Key Forecast Assumptions for Wireless TV

3.2.2 Set-Top Boxes3.2.2.1 Recent Developments in Set-Top Boxes 3.2.2.2 Key Forecast Assumptions for Set-Top Boxes

3.3 PCs3.3.1 Recent Developments in PCs

3.3.1.1 Key Forecast Assumptions for PCs3.4 Portable Devices

3.4.1 Recent Developments in MP3 Players3.4.1.1 Key Forecast Assumptions for MP3 Players

3.4.2 Recent Developments in Portable Games Consoles

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3.4.2.1 Key Forecast Assumptions for Portable Games Consoles3.4.3 Recent Developments in Digital Still Cameras

3.4.3.1 Key Forecast Assumptions for Digital Still Cameras3.4.4 Recent Developments in Internet Radio

3.4.4.1 Key Forecast Assumptions for Internet Radio3.5 WiFi Alliance Certification3.6 Recent Developments with Alternative Technologies to WiFi

4 Segmenting and Forecasting the Market for Wireless Home Devices4.1 Global Market Overview4.2 Wireless Home Devices Market Forecast Tables

5 Contact the author of this report:

2 The Wireless Digital Home

2.1 Overview

2.1.1 The Good

Current trends indicate that Wi-Fi capability will soon come in most every consumer device. In 2007 the

popular WiFi enabled products are laptop PCs, Fixed and Portable games consoles and dual mode mobile

phones. The same products will be successful in 2008 when they will be joined by portable products such

as digital cameras, MP3 players and media players. We also expect to see the first real signs of

development in the TV Centric space with the first TVs, digital media players and Set-Top Boxes. By

2009 the TV centric momentum will build representing around 25% of the total home WiFi enabledmarket. WiFi enabled LCD and Plasma TV will show the highest CAGR of 450% as manufacturers

capitalize on 802.11n standardization. Also by this time we expect vastly increased numbers of homes

switching to laptop PCs from traditional desktops, thereby further increasing WiFi usage in the home. By

2010 Dual Mode phones (WiFi) will make up 43% of the total WiFi enabled consumer device market, even

though it is still a small percentage of the total cell phone market, the numbers are huge in relation to

the conventional CE market. By the end of the forecast period, WiFi will be commonplace in many of the

consumers digital home devices, we estimate that around 35% of networked DVD recorders, Set-Top

Boxes and DVRs will be WiFi enabled.

2.1.2 The Bad

Devices being WiFi enabled and actually being used with WiFi is a very different thing. We are still

concerned that some of the major issues relating to WiFi are not being addressed as thoroughly as they

should be. Driven by high-profile devices like the iPhone, Wi-Fi is poised to become the de facto

wireless technology in the home. Manufacturers and service providers would have us believe that

installing a single access point at home may be fairly straightforward, and for some but certainly not all,

that may be true. The issue of registering WiFi devices on a home network is still far too complicated

for it to reach the critical mass market. This situation is exacerbated outside of the home as consumers

wrestle with WEP and/or WPA codes to register onto external networks.

To-date most consumers have accepted glitches and drop-out when using our WiFi, probably simply tosurf the web or read email. As we move to TV centric devices, these glitches will be unacceptable.

With these negative issues in mind the TV centric manufacturers have held off bringing product to

market based on Trimode (A/B/G) technology, waiting instead for 11n/MIMO technology. Wi-Fi

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interference comes from a myriad of things such as neighboring Wi-Fi networks, microwave ovens,

Bluetooth devices, even cordless phones. This interference causes Wi-Fi degradation. Recent technical

innovations, however, are proving to be effective in working around interference. 11n/MIMO technology

brings both speed and enhancements such as smart beam systems which adapts the direction and the

shape of the transmit beam to avoid interference. SA forecasts for the two different technologies are

graphically illustrated in Exhibit 5 - WiFi Technology MIMO/n - a/b/g Technology Segmentation Forecast

2.1.3 The Ugly

To achieve its pote