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.
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