Shortly before dawn, Richard Wollack's condo in downtown San Francisco comes to life. Shades on the eastern side of the 2,600-square-foot unit automatically lower to filter the rays of the rising sun. In the bathroom, a flat-panel TV automatically tunes to Wollack's favorite news show, piping the sound to a shower speaker. After dressing for the gym, Wollack presses a button, and his Panasonic (MC) DVD recorder spits out a disk containing TV programs downloaded overnight from his TiVo (TIVO) personal video recorder.
At dusk, the blinds rise in the west to display the sunset. Wollack and his wife, Sue, become urban maestros, using a master remote to orchestrate programming on a slew of large-screen plasma TVs and music systems. They can select any device by means of icons on the remote, which can also control the heating, air conditioning, and lighting. On this particular night, Wollack chooses tunes from Old Blue Eyes -- No. 126 on his 600-CD player. Sinatra's voice then follows him from room to room with a click of the remote. "The wonderful thing about this stuff is it gives you access to all your entertainment -- whatever you want to watch or listen to," says Wollack, co-CEO of Premier Pacific Vineyards.
Wipe your feet. You've just entered the digital home. This isn't the stuff of The Jetsons, or an episode of Star Trek. Wollack's condo is part of an Internet-driven technological wave that is rippling through houses in the U.S., Europe, and Asia. Whether it's a deluxe design such as Wollack's or a bare-bones wireless network that a student can rig up for a few hundred bucks, today's digital home represents a commitment to tearing down walls. Occupants inhabit protean rooms where data move at lightning speed. Content is available anytime, anyplace, and on whatever device the owner desires. This is a world where the couch potato lounges in the living room, presses a button, and begins watching a show recorded on the TiVo in the kitchen or upstairs in the bedroom. It's a domain in which road warriors in motion snap open cell phones or tablet computers for access to music files stored at home on a PC.
Today's connected homes look nothing like the top-down schemes for automated houses hatched by Japanese electronics companies in the 1980s. In Japan's Platonic ideal, prior to the commercial Internet, all the amenities were to be controlled by a central computer. In contrast, consumers today are setting up their electronics room by room to share high-speed Net connections and to exchange music, video, and other content. Rapid adoption of home-PC networks is speeding development of networked appliances and features. Using TiVo and ReplayTV devices to skip commercials is already "been-there, done-that." Both companies now are implementing features that let you schedule programs through the Internet remotely as well as stream them among units.
In a virtuous cycle, cool applications are also stoking demand for home networks. There's Sony (SNE) Corp.'s latest robot hound, AIBO Cyber-Blue which costs $1,299 and doubles as a watchdog, patrolling the halls and beaming pictures to a PC or handheld computer. A robot vacuum cleaner, iRobot's Roomba, is also on patrol -- doing the carpets.
Unless you have a fat bank account, tying all these things together to create a connected home on a grand scale is nearly impossible. The Wollacks spent $125,000 on their system -- far less than Bill Gates's $50 million digital home, but beyond the means of most consumers, who on average are spending about $3,000 on such setups. What's more, any keeping-up-with-the-Gateses digital dream can become a nightmare as you wade through a tangle of wires -- or wireless software codes -- and incompatible standards. For years, such barriers have stymied the smart-home concept. Indeed, the integrated home is still somewhat akin to Middle-earth in The Lord of the Rings, with factions constantly on the brink of war. "Right now, all we have are a lot of digital islands in the home," says Bill Kenney, vice-president for online strategy at Sears, Roebuck & Co.
What distinguishes today's digital homes from "smart homes" of the past is the modular nature of the technology. Because so many products are designed with Internet standards in mind, consumers can start out with just a few devices and build up slowly. It helps that PCs such as Dell Computer (DELL) Corp.'s XPS gaming machine and Hewlett-Packard Co.'s Media Center PC are becoming entertainment-oriented, while consumer electronics are becoming more PC-like -- with hard drives, screen-based menus, and built-in Net access. Piece by piece, the technology also is getting more user-friendly. That goes a long way toward explaining the explosive popularity of Wi-Fi networks, now in 11 million U.S. households.
Electronics companies understand that their wares must work together and be simple to use. That mission is facing warring factions to lay down their weapons. In June, some top-tier companies including Sony, Samsung, Philips, Nokia (NOK) and HP formed the Digital Home Working Group, which will implement guidelines allowing networked devices to work together and even interconnect automatically on the Net. "The digital home has a lot of impetus behind it and, for the first time, a lot of people pulling in the same direction," says Gartner (IT) Inc. consumer-electronics analyst Van L. Baker in San Jose, Calif.
It's no coincidence that this peace pact was signed at a time when broadband adoption is skyrocketing. In the U.S. alone, 13% of the population has high-speed Internet connections. The trick now is sharing those connections among PCs so people can shuttle both entertainment and work from room to room. That's fairly easy once the network is in place, but setting it up can be brutal. "Consumers can do some of these things today, but it's very, very painful," says Intel Corp. Vice-President Louis J. Burns.
For many consumers, the digital home begins in the home office. That's often where the most powerful PC resides, and it's still the primary location for downloading digital photos and music. But the entertainment factor is quickly luring network-savvy families into the living room, where the main attraction is digital TV. These large-screen gizmos look and act like normal sets. But they can display all manner of digital content -- and they may soon start to function like large videoconferencing screens. The Consumer Electronics Assn. expects 4 million digital TVs to be sold in the U.S. this year and 10.5 million in 2006.
The kitchen and bathroom are still works in progress, as companies struggle to convince consumers there is a benefit to having a refrigerator that automatically orders milk when the carton is empty, or a bathroom that weighs you when you step out of the bath and scrolls diet suggestions on the mirror. Nevertheless, the ultimate goal for almost every room is to deliver what Dutch giant Philips Electronics (PHG) calls "ambient intelligence." As devices get smarter, they can identify and adapt to individual users in a household, potentially making suggestions on everything from what to eat to how to dress. "Think of it as the electronic equivalent of an English butler," says Emile Aarts, vice-president and scientific program director at Philips Research Laboratories in Eindhoven. Those concepts may seem pie-in-the-sky now, but many are being tested in corporate labs -- and some are nearing commercialization.
Consider Philips' Mirror TV, which was rushed from lab to market after a delirious reaction from human guinea pigs, who volunteer to hang out in the company's HomeLab test facility in Eindhoven. Installed in a bathroom or hung on a wall, Mirror TV seems just like a normal looking glass. But at the touch of a button, it becomes a flat-panel display that can show everything from traffic and weather reports to a two-minute cartoon that teaches small kids how to brush their teeth. Philips says hotels are already lining up to buy the magic mirror, which saves space while letting them show useful info to guests.
In short, the home increasingly is where high-tech is. To get a sense of some everyday applications now rolling out, BusinessWeek interviewed residents of digital homes around the world. Not surprisingly, we found consumers who say they crave technology, but only if it's no-muss-no-fuss. They should control the technology, not have it control them. It should "just work," make life easier, and even help free up time to do something else. Here are some snapshots from the digital home:
THE LIVING ROOM Cevdet Ugur and his wife, Sarka, had a problem. The San Diego couple's six-month-old firstborn, Torun, had never seen his paternal grandparents. Ugur's bakery business kept him local, and his parents' advanced age made it difficult for them to travel from Turkey. He looked into PC videoconferencing, but his parents were leery of the technology. During a trip to Best Buy (BBY) Co., he discovered a solution: Vialta (VLTA) Inc.'s Beamer Videophone. Sold in sets of two for $500, the stylishly designed gizmos look like picture frames. Beamers are loaded with software and video chips, but use conventional phone lines to link up. Ugur set his up in the living room. A friend traveling to Turkey repeated the setup at Ugur's parents' home. After making a call, at the touch of a button, each could see the other in color video -- and the quality wasn't bad. "It was basically dumb-proof," Ugur says. "They saw the baby for the first time, from thousands of miles away."
The living room is the center of a Digital Age gold rush. Globally, consumer electronics racked up sales of $94.2 billion in the 12 months ended in May, says market researcher NPD Group Inc. in Port Washington, N.Y. The number should grow to $120 billion for the current calender year. And it's the living room that attracts most of the high-margin products. Thanks to the popularity of DVDs, consumers in the past few years have stampeded to upgrade home theaters, the large-screen TV and stereo setups that simulate a movie-theater environment. Cable and satellite companies and content providers also expect to make money selling services such as movies on demand and games through high-speed Internet connections. And PC makers hope "entertainment PCs" will perk up sluggish sales.
PCs, of course, hold gigabytes of data in the form of digital music and pictures. But more and more consumers prefer to share that content with family and friends on Net-connected TVs and home- theater setups. A survey released in June by researcher Parks Associates found that 20% of Net-connected households want to link their entertainment devices to a home network. To fill the demand, Gateway (GTW) Inc. has just announced a $249 DVD player that also lets you stream music and video from your PC to your home-entertainment system. "The new space is digital multimedia," says Kurt Scherf, vice-president for research at Parks.
In the living room, fads rule. This year, for the first time, sales of digital cameras are expected to overtake film cameras, and digital music downloading is still going strong. Free file-swapping services such as Kazaa and Morpheus have millions of users online at any moment, and Apple Computer (AAPL) Inc.'s iTunes Music Store customers downloaded 5 million 99 cents songs in just the first eight weeks of operation. As for Vialta, maker of the Beamer videophone, the plan this fall is to release a higher-end version that turns into a digital picture frame -- a device that displays preprogrammed sequences of digital photos -- when it's not doing videoconferences. Coming soon: a cheaper version that uses the TV as the picture screen.
THE KITCHEN Pardon Dory Jacobian while she takes a second to phone her oven. It's all part of her quest to create a fresh, homemade meal instead of playing the fast-food follies with her kids. Before heading out to work in the morning, Jacobian can slip a made-from-scratch lasagna into her Whirlpool (WHR) Corp. Polara range. The device contains a compressor that keeps food cold up to 24 hours and begins cooking at whatever time she programs. Better yet, at her request, the Polara calls her several times during the day to remind her when dinner is to be served. If 12-year-old Stuart's soccer game runs late, she can call her oven and command it to slow down or stop cooking altogether.
A married mother of two children whose activities include soccer, baseball, basketball, ballet, and Irish step dancing, Jacobian also works at the Boston Stock Exchange. "Every mother needs a wife," she says, mulling her hectic schedule. Even a virtual soul mate will do. She jumped at the chance to take part in Mealtime, a four-month test sponsored by the Internet Home Alliance. It will use 20 Boston families to test the digital kitchen concept. Jacobian can use her Net-enabled refrigerator to order groceries through Peapod Inc. Her local Stop & Shop will deliver it within hours. And she can watch movies or listen to music on a flip-down screen incorporated in the iCEBOX Web-enabled kitchen entertainment center. "I'm just hoping they'll figure out a way to do my taxes," she quips.
The kitchen remains uncharted territory on the digital frontier. Yet, as many a party host has noticed, no matter how often you steer guests to the living room, they always end up in the kitchen. Sears, for one, has smelled the potential in that trend. It sells 38% of all the appliances in the U.S., and like others, believes there are millions to be made in wired white goods. Sears also anticipates millions in savings if it can apply remote diagnostics to servicing refrigerators, stoves, and washing machines. In-stat/MDR predicts that 370,000 Net-connected appliances will be sold in 2007 worldwide, up from 13,000 in 2002.
Retailers are excited about radio-frequency identification tags (RFID), which many are studying as a way to track inventory. With RFID tags, your refrigerator can alert you if the milk is getting old, or you can use your cell phone while at the grocery to dial into your computer and check which items in the cupboard need replenishing.
Many of these ideas have been around for years but have made little headway. Why? According to some manufacturers, it's because, when it comes to the kitchen, the folks who hold the purse strings are those who carry purses: women. "Teenage boys and early-adopter men will put up with a lot of crap in setting up new technology. Women will not," says Tim Woods, president of the Internet Home Alliance.
THE BATHROOM An aide helps Fusako Nishino roll her wheelchair into a tanklike tub. The 88-year-old Yokohama (Japan) assisted-living resident waits patiently as the aide uses a touch panel to set the water temperature, water level, bath duration, and type of herb-based soap to be used. The Sanyo Electric Co. tub fills up in 60 seconds. It then cycles through wash, rinse, and dry -- much like the automatic washing machines the company also makes.
The retired telecom employee's biggest helper is the bathroom itself. Nishino's private washroom is outfitted with a sensor-activated faucet, so there's no fussing with taps. She has a high-tech toilet with a wash cycle of its own. "Everything is so much easier for me now," she says. Soon, she could get even more help: Matsushita Electric Industrial Co.(MC), another consumer electronics giant, has developed a medical toilet that can analyze the sugar in her urine and relay the information to a doctor over the Net.
The market known as e-health may be one of the most important digital arenas of the future, as populations in developed societies rapidly age. Japan is emerging as a test bed for digital gadgetry that is designed with the disabled or elderly in mind, but high-technology medical gadgets increasingly are getting attention in America and Europe as well.
With the explosion of e-health applications, the $1 trillion health-care industry may see sweeping changes. A 2001 Harris Interactive (HPOL) Inc. study found that a big majority of people using the Net would like to get e-mail reminders for preventive care, follow-up e-mails after visits to doctors, and faster access to lab tests.
THE BEDROOM Meet Jim Banks, "bed surfer." A self-proclaimed information junkie, Banks couldn't wait to buy one of Motion Computing's Tablet PCs for $2,600 last December. As vice-president for sales at Movaris, a Campbell (Calif.) consulting company, Banks loved the idea of getting rid of mountains of notepads and handwritten logs of all his meetings. When he brought his Tablet home, though, he discovered a side benefit. Instead of squirreling himself away in his home office reading e-mail and doing other work, he sits in the living room with his two children. In bed, he pages through an e-book about Jack Welch and GE and checks on the latest sports scores. "It's a great opportunity to do research, to do pleasurable stuff without getting in trouble with the wife," he says, chuckling.
As consumers cut the cord and use mobile devices to surf the Internet, the bedroom is quickly becoming a comfortable place to lounge. And Wi-Fi is speeding the transition, extending broadband services that were originally confined to the study. In Singapore, for instance, K.O. Wong uses a Philips' iPronto -- a combination Web pad and master remote for the television -- to browse the Internet while her husband and 6-year-old daughter battle over watching sports or yet another Disney movie.
CLIMATE CONTROLS: Alfred E. Mann's house is a digital oasis. The co-CEO of Advanced Bionics Corp. designed his five-acre Beverly Hills spread himself, deftly using water as a dramatic visual -- and functional -- centerpiece. The front security gates open and close using hydraulic pressure, which is more efficient and reliable than electricity. A 150-foot-long koi pond extends from the front entryway through small canals into the house and out to the backyard. When the wind whips up, a weather station on the roof sends a signal to a small dam, which automatically lifts the pond's water level so that it is flush with the house. That seals off the opening where the channel flows inside, thus keeping the wind from blowing through.
Mann also figured out how to pump excess energy generated by his house's evaporative air conditioners into a heat exchanger that warms his 140,000-gallon pool to a toasty 86F. "I can maintain the pool at that temperature without extra energy," Mann says. If the pool reaches 90F, the house automatically switches on a series of waterfalls, which cool down the pool -- and wow Mann's party guests.
Most cost-conscious consumers won't plunge into automated climate control anytime soon. For now, the most popular application will be swapping entertainment content among rooms. Determined to hold costs down in this and other areas, consumer electronics companies recently announced they will collaborate on creating devices using the free Linux operating system. That's a challenge to Microsoft. But the software giant still aims to make its Windows Media 9 software the dominant scheme for protecting audio and video against piracy. Other potential players in that area are RealNetworks and Apple. Even as the jockeying continues, though, Matsushita Executive Vice-President Yukio Shohtoku says, digital homes "will happen."
As the myriad devices in the digital home evolve and acquire new capabilities, each must maintain its links to all the others under the umbrella of Internet standards. Richard Wollack understands the nature of these changes. In the 16 months since he has moved into his condo, computers have nearly doubled their processing power, and Wi-Fi has taken off. Now, he's fine-tuning plans for a 5,400-sq.-ft. second home in St. Helena, Calif. Ambient heating will be built into the floors. Wi-Fi will be everywhere. And PCs in the two houses will be networked, allowing him to share music between them, as well as remotely manage fire, alarm, and air conditioning systems. Again, his dreams far exceed the means of most householders. But even with more modest budgets, there are plenty of options available to fill the bill. By Cliff Edwards in San Francisco, with Arlene Weintraub in Los Angeles, Irene M. Kunii in Toyko, and Andy Reinhardt in Eindhoven, Netherlands