WLAN popularity is cited as one of the factors, as vendors continue to make the market more competitive as they design products to win over consumers.

Overall worldwide home networks numbered 10.5 million at the end of 2001, and are expected to be at 16.6 million by the end of this year.

The market for just chips for home networking, both PHY layer (like WLAN chips) and communications processors are expected to jump from last years $261 million to $1.4 billion in the next four years. The sheer number of home network devices (not just those with wireless) that will ship by 2006 will number 167 million (up from 20.5 million this year).

As In-Stat has noted before, however, especially in the business WLAN market, price declines on these products will mean revenue growth will not keep pace with the increasing number of shipped devices.

In-Stat expects integrated System On Chip products to increase in demand, because of the lower cost they'll bring vendors, which in turn leads to more affordable retail prices.

LAN interfaces will continue to be integrated with Media Access Control (MAC) layers, so vendors can put as many connections of different kinds in to a product as they can, whether Ethernet, WLAN, or other media (such as FireWire).

The report takes into consideration not just Wi-Fi networks but also HPNA (phoneline), HomePlug (power outlet) and Ethernet networking.

"Chips Ahoy: Home Networking Chipsets Set Sail for a Prosperous Future" is available for sale at www.instat.com.