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Digital Home WiFi Enabled Devices: Global Market

Forecast and Outlook

Connected Home Devices Service

Peter King, pking@strategyanalytics.com

Forecast and Outlook Snapshot

Consumer adoption of laptop PCs, portable and fixed games consoles are the major drivers
in a 134 million unit wireless home device market in 2007. As wireless connectivity begins
to penetrate the TV and mobile device space, unit shipments will grow at an impressive
clip, exceeding 500 million units by 2012. Key issues surrounding the technology remain,
however, and will need to be addressed if WiFi is to realize its full potential: that of a
dependable, easy-to-use and ubiquitous utility. Drawing upon Strategy Analytics' 30-year
history of tracking global analogue and digital consumer electronics markets, as well as
interviews with leading wireless technology and device vendors, this report provides
detailed global and regional forecast models for most of the major emerging wireless home
device segments. It accompanies a forecast data table, "Digital Home WiFi Enabled
Devices Global Market Forecast Datatable".

July 07

1 Executive Summary

Consumer WiFi access options continue to increase: the result of a combination of growing in-home
wireless router penetration and the continued emergence of public WiFi hotspots. In response to this
trend, manufacturers are releasing an increasing number WiFi enabled consumer devices into the
marketplace.

Global sales of wireless home devices will reach 133.7 million units in 2007, an increase of 70% on 2006.
As wireless connectivity begins to penetrate the TV and mobile device space, we expect growth in 2007
to increase to 62%, leading to sales of 217 million units. Annual demand will exceed 500 million units by
2012, and cumulative sales of wireless home devices over the next five years will reach 2 billion units.

PCs and game consoles (both fixed and portable) represent the majority of in-home wireless devices,
with dual-mode cell phones, portable MP3 players and digital still cameras (DSC) quickly picking up pace.
In 2007, PC and fixed TV devices made up 54% of the total global WiFi-enabled device market. As WiFi-
enabled cell phones become more pervasive, this number will fall to 46%. While WiFi TV today represents
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only 0.2% of the global WiFi device market, as improving WiFi standards emerge, this segment will grow
to almost 5% by 2012.

Key questions persist, however, with respect to actual usage. The widening availability of WiFi-enabled
devices does not necessarily mean that consumers are actually using these devices as intended (i.e, with
WiFi).

Interoperability certification for high-performance Wi-Fi Certified 802.11n draft 2.0 products equipment
is now underway. Today's Trimode (802.11a/b/g) WiFi technologies are adequate for many wireless
home applications, but improvements offered by MIMO/N will be needed to support the high quality
video streaming capabilities demanded by wireless TV and video devices. Our model indicates that
demand for MIMO and 802.11n devices will reach 258 million units a year by 2012, primarily driven by
PCs and wireless TV devices.

To achieve its potential, Wi-Fi must transition from its role as the pre-eminent technology for building
general-purpose wireless networks into a dependable, easy-to-use and ubiquitous utility. Otherwise, it is
in serious danger of remaining a productivity tool rather than an entertainment tool. Under that
scenario, certain players in the digital home ecosystem will miss out on the opportunity to create a new
breed of consumer devices, leaving those who understand consumer user interfaces (UI) to take an early
market lead.

Drawing upon Strategy Analytics' 30-year history of tracking global analogue and digital consumer
electronics markets, as well as interviews with leading wireless technology and device vendors, this
report provides detailed forecast models for most of the major emerging wireless home device
segments. It accompanies a forecast data table, "Digital Home WiFi Enabled Devices Global Market
Forecast Datatable".

Subscribers wishing for further commentary on these issues should contact the analyst team. Details are
available in section 5

1 Executive Summary
2 The Wireless Digital Home
2.1 Overview
2.1.1 The Good
2.1.2 The Bad
2.1.3 The Ugly
2.2 Methodology and Approach
3 Recent Developments in the Wireless Home Ecosystem
3.1 Modelling the transition to next-generation WiFi
3.2 TV Centric Devices
3.2.1 Recent Developments in Wireless TV
3.2.1.1 Key Forecast Assumptions for Wireless TV
3.2.2 Set-Top Boxes
3.2.2.1 Recent Developments in Set-Top Boxes
3.2.2.2 Key Forecast Assumptions for Set-Top Boxes
3.3 PCs
3.3.1 Recent Developments in PCs
3.3.1.1 Key Forecast Assumptions for PCs
3.4 Portable Devices
3.4.1 Recent Developments in MP3 Players
3.4.1.1 Key Forecast Assumptions for MP3 Players
3.4.2 Recent Developments in Portable Games Consoles

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3.4.2.1 Key Forecast Assumptions for Portable Games Consoles
3.4.3 Recent Developments in Digital Still Cameras
3.4.3.1 Key Forecast Assumptions for Digital Still Cameras
3.4.4 Recent Developments in Internet Radio
3.4.4.1 Key Forecast Assumptions for Internet Radio
3.5 WiFi Alliance Certification
3.6 Recent Developments with Alternative Technologies to WiFi
4 Segmenting and Forecasting the Market for Wireless Home Devices
4.1 Global Market Overview
4.2 Wireless Home Devices Market Forecast Tables
5 Contact the author of this report:

2 The Wireless Digital Home

2.1 Overview

2.1.1 The Good

Current trends indicate that Wi-Fi capability will soon come in most every consumer device. In 2007 the
popular WiFi enabled products are laptop PCs, Fixed and Portable games consoles and dual mode mobile
phones. The same products will be successful in 2008 when they will be joined by portable products such
as digital cameras, MP3 players and media players. We also expect to see the first real signs of
development in the TV Centric space with the first TVs, digital media players and Set-Top Boxes. By
2009 the TV centric momentum will build representing around 25% of the total home WiFi enabled
market. WiFi enabled LCD and Plasma TV will show the highest CAGR of 450% as manufacturers
capitalize on 802.11n standardization. Also by this time we expect vastly increased numbers of homes
switching to laptop PCs from traditional desktops, thereby further increasing WiFi usage in the home. By
2010 Dual Mode phones (WiFi) will make up 43% of the total WiFi enabled consumer device market, even
though it is still a small percentage of the total cell phone market, the numbers are huge in relation to
the conventional CE market. By the end of the forecast period, WiFi will be commonplace in many of the
consumers digital home devices, we estimate that around 35% of networked DVD recorders, Set-Top
Boxes and DVRs will be WiFi enabled.

2.1.2 The Bad

Devices being WiFi enabled and actually being used with WiFi is a very different thing. We are still
concerned that some of the major issues relating to WiFi are not being addressed as thoroughly as they
should be. Driven by high-profile devices like the iPhone, Wi-Fi is poised to become the de facto
wireless technology in the home. Manufacturers and service providers would have us believe that
installing a single access point at home may be fairly straightforward, and for some but certainly not all,
that may be true. The issue of registering WiFi devices on a home network is still far too complicated
for it to reach the critical mass market. This situation is exacerbated outside of the home as consumers
wrestle with WEP and/or WPA codes to register onto external networks.

To-date most consumers have accepted glitches and drop-out when using our WiFi, probably simply to
surf the web or read email. As we move to TV centric devices, these glitches will be unacceptable.

With these negative issues in mind the TV centric manufacturers have held off bringing product to
market based on Trimode (A/B/G) technology, waiting instead for 11n/MIMO technology. Wi-Fi

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interference comes from a myriad of things such as neighboring Wi-Fi networks, microwave ovens,
Bluetooth devices, even cordless phones. This interference causes Wi-Fi degradation. Recent technical
innovations, however, are proving to be effective in working around interference. 11n/MIMO technology
brings both speed and enhancements such as smart beam systems which adapts the direction and the
shape of the transmit beam to avoid interference. SA forecasts for the two different technologies are
graphically illustrated in Exhibit 5 - WiFi Technology MIMO/n - a/b/g Technology Segmentation Forecast

2.1.3 The Ugly

To achieve its potential Wi-Fi must move from being the pre-eminent technology for building general-purpose
wireless networks, to a dependable, easy-to-use and ubiquitous utility.

Until then, it remains in serious danger of remaining a productivity tool rather than an entertainment
tool and certain players in the digital home ecosystem will miss out on the opportunity to create a new
breed of consumer devices, leaving those who understand consumer user interfaces (UI) to take an early
market lead.

2.2 Methodology and Approach

This report discusses the market potential for digital home devices that have embedded wireless
network connectivity. We have assessed the current status of wireless adoption in each major device
segment. We have also made assumptions about the drivers for future wireless adoption in each
segment. These assumptions have been integrated with our existing global market forecasts for digital
home devices as published in previous reports and maintained in our forecast databases to derive the
forecasts for Wireless Home Devices given in 4.2.

In particular we have based the current analysis on our previous work on network-enabled digital home
devices, these reports are now published quarterly. In general our assumptions regarding wireless
connectivity are closely related to the analysis of IP connected devices in general.

3 Recent Developments in the Wireless Home Ecosystem

3.1 Modelling the transition to next-generation WiFi

As well as device segmentation analysis, we have also estimated future demand for the two major
categories of WiFi standard as described in section 2.1.2

General comments can be made regarding the type of WiFi implemented in different devices. Today's
dual and tri-mode (a/b/g) systems are adequate for most data and audio applications, where data rate
requirements are relatively low. But high-quality video presents much more complex challenges, and
high-quality DVD-Video in MPEG2 format is the one of the most challenging applications of all.

There are many add-on WiFi cards available that claim to transmit video over a standard 802.11g
connection, and this they may do, at least in an environment where there is minimal interference. What
they cannot do, however, is transmit DVD-Video in its original form without reducing its quality or its
resolution. The minimum bit rate for DVD-Video is 4Mb/sec and can extend up to almost 10Mb/sec for
short, high-quality movies. This is only the bitrate required for the raw data - transmitting it over the
network adds the significant data overhead of network communication protocols and error correction.
Despite the claims of many 802.11g products of 'turbo' modes giving more than 100Mb/sec, there are
few, if any, that are fast enough to stream raw DVD data simply by sharing the DVD-ROM drive in
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Windows over the network.

This is one of the main reasons that the industry is moving towards the introduction of MIMO/N
products. While there is no absolute guarantee of flawless streaming, most MIMO cards and routers will
stream DVDs from one PC to another.

Because of these issues our overriding assumption is that lower bit-rate wireless technologies (WiFi
a/b/g) will initially succeed in devices that are not associated with high quality video applications. We
also assume that wired connectivity will continue to be deployed in products such as flat panel TVs and
associated video devices at least until the next generation of MIMO WiFi solutions are reliable and cost
effective.

The following sections highlight any relevant key points relating to WiFi adoption within each category,
and provide device examples where appropriate.

3.2 TV Centric Devices

3.2.1 Recent Developments in Wireless TV

Samsung has announced its range of products ready for the US holiday season. The company introduced
its first Wi-Fi enabled Plasma TV models in the 94 series, which includes the 50 inch and 58 inch screen
sizes. Models include three HDMI v1.3 inputs, and a hub equipped with a built-in 802.11n wireless
router. The box is kept near source devices, such as Blu-ray disc players, satellite boxes, DVD players
and media players, and will relay those images wireless to the display. The only wiring required for the
TV set is the power cord.

Samsung sees the system as an entry level home entertainment network for A/V specialty dealers and
customer installers. The company claims "It is the ideal solution for those customers who want more
affordable networking solutions without running wires throughout the home, adding the 802.11n does
not have interference issues with other wireless systems in the home, and will allow placement of the TV
up to 200 feet from the broadcast module, and does not require line of site placement". The company
expects to produce LCD and CRT versions going forward.

The Wi-Fi capability will add about a $600 premium to the cost of the plasma panel and the hub, with
the 50-inch FPT5094 shipping in mid October at a $4,500 suggested retail.

SA applauds Samsung with this announcement, but questions how long it can charge a $600 premium.

Metalink

Another potentially interesting announcement claimed that Metalink is working with IGRS, the Intelligent
Grouping and Resource Sharing working group in China to provide an advanced High Definition (HD) TV
Decoder Platform for wireless home networks. The platform will be used by all TV manufacturers who are
members of IGRS, which together account for more than 84% of all televisions sold in China.

IGRS was established in 2003 by five of China's leading computer and Consumer Electronics companies -
Lenovo, TCL, Konka, Hisense, and Great Wall, with Lenovo acting as the chair company. In addition to
the founding companies, key IGRS members include China Telecom, Huawei, Changhong, ZTE, Skyworth
and others. Today, IGRS represents all the major industry players in China providing products to both
domestic and worldwide markets.

The growth of China's CE industry is accelerating, driven both by the phenomenal growth rate of the
Chinese market and with the rising success of Chinese brands worldwide. The technically aware Chinese
embrace new enabling technologies such as Wi-Fi and it is now gaining broad acceptance. A reliable WiFi
solution for HD has been the Holy Grail in both the East and the West. After thorough investigation of

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next-generation Wi-Fi technologies, IGRS chose Metalink's 802.11n-compliant WLANPlus chipset.

SA has been unable to get any further clarification on timescales or quantities involved from IGRS, but it
would appear to be an endorsement for Metalink, achieving this design win with this organization is a
major accomplishment.

About IGRS

About MetaLink

NXP

NXP, the independent semiconductor company founded by Philips, has also launched a consumer
electronics grade module for 802.11n wireless local area network (WLAN) applications. The brand new
solution, MRX2000, enables higher throughput of rich content for quality critical applications, allowing
for faster, more powerful wireless connectivity between everyday multimedia devices. Optimized for HD
video streaming in both the 2.4GHz and 5GHz bands, the module can be integrated into a number of
applications including Set-Top Boxes, Digital Media Adapters, TVs, Residential Gateways, Routers, Game
Consoles, Media Center Applications, IP Set-Top Boxes, Digital Video Recorders and Home Cinema
Systems.

3.2.1.1 Key Forecast Assumptions for Wireless TV

As the connected home develops, we believe the traditional TV set will play a key role as a Digital Media
Player (rendering device). However, the debate is whether the TV is directly connected to the home
network through an integrated network chipset, or whether it is connected via an auxiliary device such
as the DVD player or the STB or in Samsung's example - a hub.

Strategy Analytics has always maintained that TV manufacturers have resisted building new non-core
technologies into the set. We are therefore relatively cautious about the opportunity for wireless-
enabled flat panel TVs. We estimate that only a fraction of 1% of the flat panel TV market is currently
wireless-enabled, but that this share will rise to 3% next year and eventually to nearly 21% in 2012.

3.2.2 Set-Top Boxes

3.2.2.1 Recent Developments in Set-Top Boxes

There have been a number of announcements of wireless STBs, one of the recent ones is Samsung's
SMT-H6155, and it is specifically designed for the delivery of HD IPTV over wireless LAN. It is equipped
with the STi7109 chipset providing the HD video decoding technology from STMicroelectronics, and
Metalink's 802.11n WLAN Plus chipset enabling the wireless delivery of multiple HD video streams
throughout the home.

3.2.2.2 Key Forecast Assumptions for Set-Top Boxes

As with DVRs, we expect some service providers to push wireless-enabled set-top boxes more readily
than others. As has been indicated by recent developments, IPTV providers in particular have shown
willingness to move in this direction. We still believe in general that current wireless technologies are
inadequate for the ideal set-top box solution, which would allow set-top boxes to distribute high quality
MPEG2/4 video around the home network and/or to other set-top boxes. But as the next generation of
WiFi becomes available this problem should ease.

We estimate that less than 1% of digital TV set-top boxes will be sold with integrated wireless capability
in 2007. This share will rise steadily for the reasons given, but only reach 10% by 2012, equivalent to
annual sales of 21 million devices.

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3.3 PCs

3.3.1 Recent Developments in PCs

We have made a small change to our forecast model this year. Previously we had two separate PC
categories which this year we have amalgamated into one.

3.3.1.1 Key Forecast Assumptions for PCs

In our wireless home device model, home PCs are primarily consumer laptops, the vast majority of which
will have integrated WiFi throughout the forecast period. We also take into consideration business
laptops which are occasionally used in the home network. We exclude non-wireless consumer desktop
PCs.

We estimate that 33 million PCs will be sold with integrated wireless capability for home network usage
in 2007. This figure will rise to 42 million next year and by 2012 almost 100 million devices.

3.4 Portable Devices

3.4.1 Recent Developments in MP3 Players

Microsoft's Zune and SanDisk's Sansa Connect are two recent examples of portable MP3 players that
have built-in Wi-Fi. Apple's iPhone now also comes with Wi-Fi. It is inevitable that Apple will release a
WiFi enabled IPod in the not too distant future. Maybe there are some clues here. The U.S. Patent and
Trademark Office have revealed a raft of new patent applications submitted by Apple's lawyers, covering
new technologies for iPods, Web pages and mice. It should be noted that SA does not regard a patent
application as a product roadmap, but nevertheless it does provide some pointers. The most intriguing
example appears to involve a method for allowing an iPod or iPhone to talk to a neighboring device
through a wireless network. The application assumes that mobile devices already are capable of
downloading data from the Internet over cellular or Wi-Fi networks, "however, as portable electronic
devices become more versatile and more interactive, it is advantageous to exchange (send and/or
receive) media or other types of data with other electronic devices in a wireless manner."

This would appear to put iPod on collision course with Zune which already has this capability - the ability
to exchange songs with fellow Zune owners. Previous Apple patent filings have hinted at this type of
capability, but it appears that momentum is building for a Wi-Fi iPod that can talk to other iPods. SA
hopes that Apple can take it one step further than Microsoft did with Zune, by opening up the WiFi
usage. DRM of course will have a big part to play in the future of WiFi music players and tune swapping,
and the outcome is still unclear on this issue. The iPhone comes with both Bluetooth and Wi-Fi, but it
doesn't appear possible for fellow iPhone owners to swap songs over a wireless network, at least yet.

3.4.1.1 Key Forecast Assumptions for MP3 Players

In general we are not optimistic that WiFi will become a regular feature on standalone MP3 players
because there are too many alternative sources for the online music functionality that this feature
primarily enables. We estimate that 2.5 million wireless-enabled MP3 players will be sold in 2007, or
around 2% of the total market. We expect modest growth in this share, reaching 7% in 2012, or around
13 million units globally.

3.4.2 Recent Developments in Portable Games Consoles

Nintendo is currently the console manufacturer to follow, both in fixed and portable platforms. While
the Wii is easily outselling the PS3 and Xbox360, the DS is dominating over the PSP in all territories.

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Since its launch in November 2005, Nintendo's Wi-Fi Connection a wireless gaming service has now
connected more than 5 million unique Nintendo DS owners, and those gamers have racked up more than
200 million game-play sessions. Worldwide, nearly 65 games can be played via Nintendo Wi-Fi
Connection.

Sony has announced a new version of PSP to be launched later this year, it looks very similar, but it is
33% lighter and 19% slimmer and comes with a TV out cable for playing content on the big screen. During
the two and a half years since the launch of PSP in December, 2004 PSP has achieved cumulative
shipment of 25 million units for the hardware and 100 million units for software titles worldwide by
March, 2007. Presently, the PSP can only be updated via connection to an external device, but Sony have
in the past mooted the idea of direct-access to the PSP Store via the handheld's WiFi connectivity. On
demand games and content would certainly open up a raft of new opportunities on the PSP, SA believes a
games-on-demand option will further enhance sales.

BT (UK Telco) and Sony Computer Entertainment Europe (SCEE) have signed a groundbreaking deal to
transform the PSP gaming device by adding wireless broadband communications functions, including
high quality handheld video calls, voice calls and messaging.

The two companies signed a four-year contract to develop a raft of extra features for the PSP, which has
already shipped over 8 million in Europe. BT will be SCEE's lead wireless communications partner across
SCEE territories and is already working with other communications providers to deliver this exciting
service. BT and SCEE will initially promote the offer in the UK. Like many operators BT has developed
the ability to provide high quality video and voice calls over the internet as part of its world-leading
21CN project. This partnership intends to integrate PSP with the BT Broadband video and voice
`softphone' products already available in the market today.

SA has always maintained that the PSP was far more than a gaming machine; we will watch this
collaboration with interest.

3.4.2.1 Key Forecast Assumptions for Portable Games Consoles

Our forecast assumptions are that all portable games consoles from now on will include wireless
connectivity. As with most other portable devices, we do not see a near-term migration to MIMO/n
technology as there appears to be little justification for these improvements in handheld and portable
applications.

3.4.3 Recent Developments in Digital Still Cameras

The integration of wireless technology into digital cameras, a topic which we covered last year hasn't
gone mainstream yet, but progress is being made, part of an effort to fight back against camera-
equipped cell phones and make digital cameras more of a stand-alone device. For years, digital cameras
had to be docked or attached to a PC for consumers to get their photos. When consumers traveled, they
worried about filling up their cameras' memory cards or losing them, and could only empty the cameras
by connecting to their PC or laptops which they probably left at home.

As portable camera cell phones continue to grow in popularity, some consumers are abandoning point-
and-shoot digital cameras. DSC manufacturers have to fight back using WiFi and SLR technology to
provide flexibility and image quality. Digital point-and-shoot cameras boast an average picture quality of
seven megapixels, while camera phones have an average 1.0-megapixel picture quality, so for a while at
least DSC has the quality edge.

On the strength of these initiatives SA believes that global DSC market will remain fairly static in the
next few years at around the 100 million units per year figure. Overall, wireless digital cameras made up
just 2% of the total DSC market last year.

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Wireless cameras are definitely more expensive than their wired counterparts and this may deter many
consumers. Some companies are creating less expensive technology to turn ordinary digital cameras into
wireless devices. One such company is Eye-Fi a US start-up, which has combined networking technology
and memory chips into a single card. The card can be inserted into digital cameras and will wirelessly
send pictures stored on the card to computers or photo-sharing Web sites. The company is negotiating
with about a dozen Web sites to allow direct uploads from cameras containing the card which is set to
cost about $100 when available by the holiday season.

Eye-Fi's cards are designed to conform to the standard SD card size; the cards contain enough spare real
estate to incorporate a Wi-Fi chip. The networking functions on the card shut down when photos aren't
being sent in order to save battery life. Details are vague but we believe it will have a maximum 2GB
capacity.

3.4.3.1 Key Forecast Assumptions for Digital Still Cameras

We estimate that sales of WiFi-enabled digital still cameras in 2007 will reach 3.8 million units, or just
fewer than 4% of the total global market. We expect this share to have risen to nearly 11% by 2012,
representing sales of more than 12 million units.

3.4.4 Recent Developments in Internet Radio

Since our last forecast we are seeing a growing number of Internet Radio devices entering the market.
Physically like a small home radio player, Internet Radio technology players work anywhere that there is a
broadband connection and with no PC required, it is an efficient and user-friendly way to listen any
radio, podcast, digital music collection or online music-based service.

Com One Phoenix - WiFi Radio known for its Bluetooth accessories, is venturing into the home audio
market with a Wi-Fi-equipped AC/DC Internet radio. The company is beginning to ship its $249-
suggested Phoenix IP radio to distributors. The radio, which operates off household AC or included
quartet of rechargeable AA batteries, features embedded 802.11 b/g Wi-Fi, integrated full-range stereo
speakers, and 2x2-watt amplifier in a tabletop chassis that weighs less than two pounds. It streams
music from non-subscription Web-radio sites, without the need for a PC, in the MP3, WMA, AAC, Real,
WAV and AIFF formats. The Phoenix is preloaded with 300 URLs, but users can go to Com One's Web site
to push the URLs of about 7,000 more Web radio stations to the device. Consumers can also use the
Web site to add stations not in Com One's database by keying in a station's URL.

Roku Roku reduced the suggested retail prices of its Internet-connected SoundBridge Radio to $299 from
$399, it is also licensed to Pinnacle Systems for sales outside of the USA. The SoundBridge Radio is a
Wi-Fi-equipped clock radio capable of playing Internet radio stations or networked-PC music files. It
features an Ethernet port and built-in wireless 802.11b to stream radio stations through networked
broadband modems and stream music files residing on a networked PC.

Reciva Reciva Internet Radio Technology works with Industrial Design Partners to provide complete
Internet Radio Products and also provide Internet Radio Reference designs. The company had shipped
over 50,000 internet radio modules by February of this year.

3.4.4.1 Key Forecast Assumptions for Internet Radio

SA has not yet included Internet Radio into its WiFi Home Devices market forecast; the global shipment
numbers are still in the low hundreds of thousands. We will watch the segment very closely and monitor
progress.

3.5 WiFi Alliance Certification

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Interoperability certification for high-performance Wi-Fi equipment is now underway. Wi-Fi Alliance
Authorized Test Laboratories began testing products last month, and Wi-Fi CERTIFIED 802.11n draft 2.0
products are already on the way to store shelves. Wi-Fi CERTIFIED 802.11n draft 2.0 products have been
tested for interoperability across vendors, adherence to WPA2TM (Wi-Fi Protected Access) security
protocols, and backward compatibility with more than 3,500 Wi-Fi CERTIFIED 802.11n a/b/g products.
Products based on the new IEEE 802.11n draft deliver up to five times the throughput and up to twice
the range of those based on previous standards, enabling a wide range of content-rich applications, and
delivering those applications over a larger footprint. The certification program also includes WMM® (Wi-
Fi Mutlimedia) quality of service, which helps deliver the best user experience with applications such as
video, voice, and gaming.

The full list of 35 products (16th July 2007) is available here, the products are mainly routers and
adapters at this point, from manufacturers such as: D-Link, Linksys, Netgear, Metalink, Buffalo, Atheros
and Marvell.

3.6 Recent Developments with Alternative Technologies to WiFi

Tzero Technologies recently revealed its new ZeroWire chipset (TZC7200), a WiMedia standards-based,
ultra wideband (UWB) semiconductor solution optimized for real-time delivery of high-definition video,
wirelessly and over wires. The chipset gives consumer electronics manufacturers another route, other
than WiFi, to create new classes of wireless video devices - HDTVs, digital video recorders, and more.

ZeroWire allows service providers to expand next-generation broadband and IPTV services. It delivers
the performance and sustained throughput to support multiple high-definition video streams. Because it
works over existing coax cabling, it significantly reduces the cost of installation.

Tzero has been a key partner for Samsung working closely together to extend ultra wideband wireless
technology to support an open standard that works over existing in-home coax cabling. Combined with
HANA technology, Samsung plans to build set-top boxes that will enable carriers to create the first
complete whole home high-definition A/V networking solution, which will allow consumers to share their
media and devices across the home without sacrificing quality.

ZeroWire claim performance for multiple high-definition video streams with PHY data rates of up to 480
Mbps over coax for whole-home coverage and wirelessly within rooms. The sustained data rates are
more than double that of MoCA-based products and more than 10x that of WiFi solutions including those
using 802.11n, they claim.

This seemingly piece of good news for Tzero was soon overshadowed by another announcement towards
the end of June when Pulse~LINK, a innovator in UWB communications, announced that it had
commenced federal litigation against Tzero, claiming infringement of Pulse~LINK's patented UWB
communications technologies.

Pulse~LINK claims to be the oldest UWB company focused on high-speed commercial communications,
and is widely recognized as the pioneer of a broad range of UWB technologies. It claims a series of
industry firsts stretching back to 2002. For those who want the details check them here.

SA has long maintained UWB has had the potential to challenge WiFi but the technology has been held
back by a string of problems:

Failure to define a single standard for UWB

Failure to agree on what its is best used for: USB cable replacement, personal networks (PAN) or
HD Networks
Constant in-fighting between the leading players in the UWB market.

No doubt one day UWB will emerge from the shadows and reveal its true potential, but we have enough
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serious reservations that we have not yet started to forecast the number of UWB-enabled CE devices.
The longer the players drag out the war, the further entrenched the WiFi standards will become.

4 Segmenting and Forecasting the Market for Wireless

Home Devices

4.1 Global Market Overview

Our research shows that sales of wireless home devices will reach 133.7 million units this year, 70% up
on the 2006 total (Exhibit 1 - Wireless Home Devices: Global Market Forecast). The vast majority of
these devices were home laptop PCs, fixed and portable games devices. 2008 will see an ever faster
rate of growth as wireless connectivity begins to penetrate TV and mobile phone devices. We are
projecting a 62% increase in 2008 to 216.9 million units. By 2012 annual sales will exceed 500 million
units.

Exhibit 1 - Wireless Home Devices: Global Market Forecast

Over the six-year forecast period, cumulative sales of wireless devices will be spread relatively evenly
between the four major segments identified in our research: home PCs, TV devices, portable media
devices and WiFi-enabled mobile phones (Exhibit 2 - Wireless Home Devices Cumulative Sales 2007-
2012). It may be surprising that cumulative sales of TV devices will exceed those of WiFi-enabled home
PCs over this timeframe due to the continued success of the games consoles.

Exhibit 2 - Wireless Home Devices Cumulative Sales 2007-2012

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Demand for wireless TV devices will initially be driven by the next generation of games consoles (Exhibit
3 - Wireless TV Devices: Global Market Forecast by Segment). By 2009, however, we expect sales of
these devices to be in decline in line with the normal games console life cycle patterns. At this stage
demand for other wireless TV devices such as flat panel TVs, set-top boxes, DVD recorders and DVRs will
be accelerating, driven by wider availability of next-generation (MIMO/n) WiFi technologies that support
high quality video streaming. Annual sales of all wireless TV devices in 2012 will exceed 132 million
units.

Exhibit 3 - Wireless TV Devices: Global Market Forecast by Segment

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As with TV devices, games consoles are the first portable media device category to feature WiFi
connectivity in significant volumes (Exhibit 4 - Wireless Portable Media Devices: Global Market
Forecast). Digital still cameras and MP3 players will begin to add to demand towards the end of the
forecast period, but we expect consoles still to be the largest single portable media device segment
through 2011.

Exhibit 4 - Wireless Portable Media Devices: Global Market Forecast

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As discussed in 2.1.2, our analysis of the prospects for new MIMO and 802.11n versions of WiFi are
dependent on the need for high quality video support by individual devices. The conclusions of this
approach are illustrated in Exhibit 5 - WiFi Technology MIMO/n - a/b/g Technology Segmentation
Forecast. This chart indicates that we expect demand for a/b/g devices to continue to rise throughout
the forecast period. Demand for a/b/g fixed devices, such as home PCs and TV devices will continue
initially but will decline after 2008 as 802.11n devices take over. In mobile devices, however, we expect
demand for a/b/g devices to continue to rise until 2010. After 2007 demand for MIMO and 802.11n
devices will grow strongly, both in PCs and TV devices.

Exhibit 5 - WiFi Technology MIMO/n - a/b/g Technology Segmentation Forecast

4.2 Wireless Home Devices Market Forecast Tables

Exhibit 6 - WiFi Home Devices Global Market Forecast

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Exhibit 7- WiFi Trimode/MIMO Segmentation Forecast

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Exhibit 8 - Wireless Home Devices Market Forecast Table - US

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Exhibit 9 - Wireless Home Devices Market Forecast Table - Europe

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Exhibit 10 - Wireless Home Devices Market Forecast Table - Japan

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Exhibit 11 - Wireless Home Devices Market Forecast Table - Rest of World

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5 Contact the author of this report:

If you want to discuss the findings of this report, or if you have inquiry privilege please contact the
author of this report Peter King using pking@strategyanalytics.com or the following number: +44 1908
423 615

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