Intel Jumps Into Home Networking

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Intel Corp. moved aggressively into home networking last
week with a product lineup aimed at grabbing retail market share before more big players
enter the space.

In a move that it forecast months ago, the giant chip-maker
unveiled its "AnyPoint Home Network" kits, which enable multiple personal
computers to use existing home phone lines for sharing a single Internet connection or
peripherals such as printers.

While Intel is not the first major player to offer products
for the potentially lucrative home-networking sector, it has jumped in with what analysts
said is an unusually strong retail presence months ahead of similar products expected from
major rivals Microsoft Corp. and 3Com Corp.

Besides selling the kits from its Web site, Intel also made
them available through the CompUSA computer retail-store chain, through IBM Corp.'s
"Owner Privileges" program for buyers of its "Aptiva" PCs and as an
optional bundle with computers from Gateway 2000, one of the nation's leading PC
sellers.

"What we're seeing is that more and more of the
Gateway client base is coming back and buying second or third PCs within the home,"
said Heath Johnson, product-marketing manager for Gateway Solutions. "The No. 1
reason why people are buying PCs is Internet access. Without a product such as home
networking, you only have one PC within the home that can access the Internet at one
time."

Networking demand is also being driven by the growing
availability of broadband Internet connections, such as cable-modem or
digital-subscriber-line services, without which simultaneous Internet access by two or
more computers in a household would be painfully slow.

Analysts also said the availability of simple home
networking will likely boost consumer interest in buying other services, such as
multiplayer gaming accessible over broadband networks, and additional peripherals, such as
DVD players, which take on greater value when accessible by multiple family members at
once.

Intel's initial lineup consists of an external unit
that connects via the PC's parallel port and an internal network card. A two-PC-unit
package has a suggested retail price of $189, while a one-PC kit is $99 and the PC-card
version is $79.

The devices conform to Home Phoneline Networking Alliance
(HomePNA) standard 1.0, providing network bandwidth of 1 megabit per second.

Intel indicated that it planned additional products
supporting other connectivity platforms, such as radio-frequency or power lines, and it
expects to deliver devices soon supporting speeds of 10 mbps -- the rate mandated by the
HomePNA 2.0 standard, which is slated for completion in the second half of this year.

Microsoft and 3Com announced plans last month for their own
HomePNA standards-based cobranded lineup of home-networking kits supporting data speeds of
10 mbps, but they did not expect to roll the product out to OEMs (original-equipment
manufacturers) before this summer and to retail this fall.

"There's a little bit of a time-to-market
factor," Mike Wolf, an analyst for Cahners In-Stat Group (a sister company to Multichannel
News
), said of Intel's retail launch. "Obviously, with something this new,
it's not on a lot of peoples' radar at this point."

But that could change quickly, especially as more players
enter the market and the arrival of more advanced 10-mbps equipment pushes down prices for
the older gear.

Wolf estimated that the home-networking market for all
connectivity platforms -- phone lines, power lines and wireless -- could grow from $230
million this year to $1.4 billion by 2003.

"Intel has a vision of 1 billion connected PCs in the
next decade," said Mark Christensen, vice president and general manager of
Intel's network-communications group, in a prepared statement. "Simple,
affordable home networks are an essential step and necessary component toward realizing
this vision."

Analysts noted that Intel had been active in the HomePNA
standards process for some time. Combined with the company's existing OEM
networking-hardware expertise, involvement in the sector was a natural expansion into a
potentially huge lucrative consumer business.

"They've been doing market research for three
years, and it helps that they're a silicon provider that is already actively involved
in the networking space," Wolf said.

In another reflection of the heated interest in home
networking, National Semiconductor Corp. and Alation Systems Inc. announced their plans
last week to develop and market chip sets intended for wireless home-networking devices
that could retail for as little as $60 per unit.

The chip sets, with data speeds of 1 mbps to 2 mbps, will
be based on Alation's consumer-oriented "HomeCast Open Protocol," and they
should be available to OEMs in the third quarter, National Semiconductor said.

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