Key Platform
As broadband proliferates, service providers will continue to evolve their current CPE (customer premise equipment) strategies from a “modem-only” termination to one where service gateways are shipped to subscribers, enabling advanced service packages including data, voice, home control, and entertainment services that are distributed over the home network. This transformation will result in impressive growth for the residential-gateway market, which will increase from $125 million in 2001 to over $5 billion in 2006, according to In-Stat/MDR.

The high-tech research firm reports that despite the fact that the early market for gateways has been undercut by low-cost home routers that meet the needs of most consumers, the market for more advanced gateways will materialize as the router/bridge and modem are integrated into one device and more advanced service features are incorporated over time. Additionally, the incorporation of caching capabilities into entertainment gateways will create a gateway/home server category that opens up exciting content-delivery options for carriers and consumers alike.

The increased use of broadband, combined with the development of new and interesting ways to interconnect devices in the home, has put the residential gateway on the map of nearly every vendor in the modem, router, set-top-box, CPE silicon, and consumer-software spaces. While challenges lie ahead, such as the management of these more intelligent devices and the need to create compelling content and logical business models that leverage the opportunities home networks provide, we believe that over time the service provider will overcome the current capital expenditure constraints inhibiting this market and move to a predominantly residential gateway-based customer-termination strategy.

In-Stat/MDR has also found that:

North America will be the largest gateway market throughout the forecast but will see its overall percentage share of units shipped shrink as other geographies see faster overall broadband growth and, eventually, increased deployment of advanced CPE in the form of gateways.
Multiple home network technologies will be incorporated into these gateways such as wireless LAN, Ethernet, and IEEE 1394, depending on the type of content that will be distributed.
Source: In-Stat/MDR report, Residential Gateways: The Coming Battle for the Digital Living Room (#IN020233RC).