Eli Noam

Smart Homes

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Abstract:
The consumer electronics industry has been flat for several years. Hopes are now being pinned on the emergence of home networks. The theory goes that if consumers were able to "internetwork": that is, connect all their gadgets—from televisions to personal computers to digital video players to phones and anything in between—they would rush out to buy new toys and devices.

The incremental business has been estimated by one New York investment bank as $250 billion over seven years, of which two-thirds would go to the consumer electronics industry. A quarter of a trillion dollars—that gets people's attention.

It can be dangerous, however, to get what you hope for. I believe that, in the long run, the traditional consumer electronics industry will be significantly weakened by home networking, unless it can drastically change its business model.

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