The market for advanced home networking semiconductors that make quality transmission of high-definition media streams possible for homes is set to expand by a robust 13 percent this year from 2011, hindered only from even larger expansion by existing technologies like Wi-Fi and Ethernet, according to an IHS iSuppli Broadband & Digital Home special report from information and analytics provider IHS.
Revenue for the special class of semiconductors known as high-speed, high-quality-of-service (QoS) silicon is projected to reach $465.2 million by year-end, up from $411.8 million last year. The 13 percent climb this year mirrors the market’s four-year compound annual growth rate—also averaging 13 percent—starting from 2008, when revenue amounted to $293.2 million. Over the next four years, revenue will increase to some $879.0 million, IHS iSuppli forecasts show.
The market for high-QoS networking silicon has been propelled during the last four years by the booming markets for Internet Protocol TV (IPTV) and multiroom digital video recorders (DVR). Such high-QoS networks have become increasingly common, as entertainment-quality streaming video applications increase their global penetration. Adoption has been consistent in developed countries, especially where high-definition TVs and multi-TV households are frequently found.
In particular, high-QoS semiconductors are on the brink of mainstream adoption in the customer premises equipment (CPE) of service providers, in equipment like set-top boxes and routers. Not only has the silicon vendor space developed the capability to integrate the technology into the CPE, service providers themselves have also been installing home networks as a prerequisite to IPTV service. In the United States, for instance, the foremost proponents of IPTV service include Verizon for its FiOS service, and AT&T for its Uverse. The installations for IPTV service often make use of four to six chipsets per subscriber, while non-IPTV video subscribers upgrading to multiroom DVR services require two to four chipsets per user.
Continuing healthy use of the chipsets translates into solid shipments for the market. Wireline home networking silicon shipments will climb to more than 83 million units by year-end, up from 32 million units in 2008. By 2016, shipments will have surged by more than a factor of seven compared to 2008 levels, reaching 243 million units.
The growth trajectory of the space could even be much higher if the industry were to penetrate the ultimate market for home networking—native implementation in consumer electronics. The chances for this to occur, however, are slim. The consumer industry has good existing solutions available for the Internet-capable devices on the market today, in the form of Wi-Fi integrated into the devices, or wired Ethernet that has been built in as a standard feature.
The consumer electronics industry is also hesitant at present to adopt high-QoS home networking silicon for one other reason: no single unifying standard is in place for wireline networking technology. Several popular—and incompatible—standards exist today, such as Multimedia over Coax Alliance (MoCA) and HomePlug AV, with further choices on the horizon in the form of the G.hn networking standard from the International Telecommunications Union (ITU). Consumer electronics manufacturers are unlikely to adopt a high-QoS wireline technology while any hint of standards confusion remains.
Meanwhile, the overall competitive landscape of the home networking industry continues to evolve. Nearly all the original independent high-QoS networking vendors were swallowed up in 2009 when large System-on-Chip (SoC) manufacturers like Broadcom, Qualcomm, Sigma Designs and Lantiq swept in. Since then, big players like Marvell, MeditaTek and STMicroelectronics have also made their own acquisitions, scooping up the remaining independents. All the acquiring companies have positioned themselves toward integrating home networking technology into their SoC products as the technology enters the mainstream.
For its part, Entropic, the sole survivor among the original independent vendors, has recently acquired the set-top box assets of Trident in order to enable its own integration strategy. So far, only Broadcom has performed integration of wireline networking—and only for MoCA. But assimilation of the technology is coming, and vendors that are without plans for home networking may soon find themselves left out in the cold.
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