Home networks in Europe

Readers often ask me about the state of home networking in Europe. While there’s plenty of data detailing the state of broadband deployment, details on home network deployments are just taking shape.

Recent Ins-Stat/MDR research shows Europe trails North America in home network installs by about 7 million (5 million to about 13 million households). But by 2007, we expect Europe to have nearly 19 million home nets, compared with 30 million for the U.S. and Canada. Today, growth on both sides of the Atlantic is driven by the need to share that a broadband connection. In the future, it will be driven by entertainment applications such as online gaming and digital audio sharing.

But hardware vendors selling here can have a tough time expanding their markets there. Unlike the U.S. and Canada, Western Europe’s 19 major countries equal 19 unique markets, each with its own language. Packaging, instruction manuals and marketing materials need to be translated, at considerable cost. Moreover, each country has different regulations, peculiarities and customs that need to be addressed.

Then there are the technology obstacles, such as differing regulations over things such as powerline communications and the use of phone wiring. This means HomePlug and HomePNA will likely never get off the ground, as vendors won’t spend the money to develop products for each market. There have been some launches of HomePNA in Europe, but they’ve been hampered by the market complexity.

So with all these differences, vendors are particular about which markets they enter. Many countries won’t generate much interest, as their market size needs to be big enough to offset the cost of localizing products. Which countries are big enough to justify a product launch? As you’d expect, those with high numbers of broadband deployments, such as Germany, the U.K., France and Spain. Germany leads the way with more than one million home networks, and the latter three each count about half-a-million home networks. Countries such as Belgium and Netherlands benefit from much higher per-capita installations, each with around 350,000 home networks.

Netgear, D-Link and Belkin all have a strong market presence in these countries, as do European companies such as Siemens. Japanese vendor Buffalo Technologies has also entered the European market, selling gear in the U.K., Ireland, Sweden and Germany. 

Surprisingly, Linksys, the biggest North American vendor, lags behind. Less than 10% of Linksys’ sales come from Europe, compared to about 25% for Netgear and D-Link. However, Linksys plans to leverage parent Cisco’s existing sales and marketing infrastructure in Europe to help catch up.