Retail vision drives cable modem market: Target customers represent huge potential, but a few obstacles remain

Don't look for a cable modem under the Christmas tree this year.

That was the short version of Retail Forum '98 in Chicago last week, sponsored by Motorola, a cable modem manufacturer with a strong interest in getting the devices onto the shelves of consumer electronics stores.

"There's the potential for huge growth," Motorola CEO Christopher Galvin said in opening remarks at the gathering. "You can just feel it."

Motorola research shows that awareness of cable modem Internet access has reached 15% of the general public and is even higher among on-line households. Early adopters of cable modem access report higher satisfaction levels than those using any other Motorola technology.

Although such findings are encouraging, Galvin pointed out that certain obstacles must be overcome before a retail cable modem industry can arise. Most notable among those are the installation of a two-way cable infrastructure, the wide acceptance of cable modem standards of interoperability and the forging of distribution partnerships with both retailers and computer manufacturers.

The complexity of those partnerships was the theme of many retail representatives at the conference. Richard Sharp, CEO of Circuit City Stores, said his company has been selling cable modems for MediaOne in its Boston-area stores for more than a month. But the company has only recently worked out logistical problems involved with demonstrating the product and signing up customers for both the modem and cable access service.

RadioShack plans to establish itself as "America's Home Connectivity Store" by offering cable modem technology-along with satellite and power-line solutions-in its 7000 stores nationwide, said Richard Borinstein, senior vice president of merchandising for RadioShack. The chain will set up a fleet of technicians and 10,000 vans to go to customers' homes and hook them up.

Forum participants also got a glimpse of future cable modem customers from William Bluestein, vice president of Forrester Research: The "next wave" of high-speed Internet users will be "less techie and more mainstream." Today cable modems appeal most to on-line veterans of more than two years between the ages of 45 and 64, with annual household incomes of more than $75,000. The new cable modem customers will be younger, less affluent and less experienced with the Internet, Bluestein said.

He said cable service providers are the "weakest link" in the service delivery chain because of a mixed customer satisfaction record and perceived high prices.