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Networked Entertainment Appliance Category

The market for networked entertainment devices is currently dominated by gaming consoles. ABI Research estimates that in 2006, 44 million consoles and portable gaming handhelds will ship with network connections. But Mike Wolf, principal analyst at ABI Research says that "As the market for online distribution of content continues to expand, other device categories such as DVD players, set-top boxes and TVs will begin to rival the gaming market's dominance in the world of networked entertainment appliances."

Today, many millions of handhelds from Nintendo and Sony ship with wireless networking connections, and the new generation of consoles from the big-three vendors all feature options for consumers to connect to online gaming services.

But over the next few years that dominance will start to change, and one of the fastest growing segments will be set-top boxes, as service providers look to add multi-room video services to their repertoire of offerings. In addition to expanding the reach of premium pay video to other set-top boxes, service providers are also beginning to push their hardware partners to integrate Wi-Fi and other connectivity types, allowing the delivery of Internet based content to consumer electronics devices both in and outside the home.

"The inclusion of Wi-Fi in portable devices and set-top boxes creates an ecosystem for delivery of content beyond today's closed systems." said Wolf. "This push by premium video providers will open up new service and content models to compete with the PC as a channel for delivery of video content."

Other device groups such as DVD players/recorders and networked home theater systems are also expected to grow. Initiatives such as Microsoft's Media Extender Partner Program and the new Internet TV consortium with Sony and others, will drive embedded networking connectivity in mainstream consumer electronics devices.

"The fastest growing category for networking silicon providers is entertainment," said Wolf. "Every provider of solutions for high-bandwidth communications technology is busy developing focused solutions tailored to the needs of the consumer electronics vendor. The problems of the past, such as low speeds and lack of standards for software layers, have been resolved, opening the door on an enormous opportunity."

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