NPD study looks at digital homes

While consumers are building digital home networks with printers and other PCs, they are still behind in other areas of their digital life through a computer, said Darrel Ryce, director of NPD Group Canada.“This study also indicates that home users are using their network for mostly printing and scanning devices,” he said.
Manufacturers and retailers are not getting the message across about the real value of home networking and the capabilities of a whole entertainment package, added Ryce.
“We’re seeing so many manufacturers coming into each other’s space,” he said.
The line between consumer electronics and IT is a lot thinner today compared to five years ago, added Ryce.
Manufacturers like Hewlett-Packard now have a vested interest in this market, with entries into the digital camera and television arena.
“It’s a market already full of competitors but traditionally the consumer electronic space has always been like that,” he said.
Since consumers are used to and expect a lot of choice, there is room for more players, according to Ryce.

Collaboration
“There’s a lot of opportunities for companies. They may not be competing against each other but should work collaboratively to drive penetration of this market.”
In a national survey conducted by Decima Research, 68 per cent of Canadians were unable to define the concept of digital home networking.
That finding doesn’t surprise Ryce.
“Only a fraction of Canadians are actually taking advantage of the options that are out there,” he said.
Ryce added there is a significant gap between home networking options and consumer knowledge.
That gap, according to IDC analyst Eddie Chan, is in large part due to standards still being ironed out.
“3C convergence is coming,” said Chan. “The computing, communications and consumer electronic world is melding together and everything will be IP enabled.”

Wild West
All the key players are jostling for positions, he added, “but it’s still very much the Wild Wild West and what service providers can offer in terms of product still needs to be determined.”
Chan also sees an opportunity for resellers in this market.
“They need to get educated on the set up, installation and support. It’s still a small market but the channel should be able to service these types of customers,” he said.
However, according to the Decima survey, the lack of consumer education is stifling sales as 49 per cent of the respondents said they have delayed a purchase of a home digital device due to confusion.
But according to IDC figures from early this year, Chan said PC penetration into households is higher in Canada than the U.S.
“We’re just north of 76 percent,” he said. “There is a growing interest in media centre functionality and ease of use as well as price points are improving.”
NPD Canada also found that:
• Digital home products generated more than $5 billion in revenue in the Canadian retail market in the 12 months ending March 31, 2005.
• The biggest year-on-year growth in digital home products comes from MP3 players (up 246 per cent), notebook computers (up 33 per cent) and digital cameras (up 25 per cent).
• Sixty-two per cent of Canadian digital home networks have a printing device attached.

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Jim Love, Chief Content Officer, IT World Canada

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