The Windows Home Server, co-developed by Microsoft and Hewlett-Packard, initially will gain acceptance from a small group of enthusiasts. But long term, consumer companies will dominate this area with more user-friendly products, according to Ted Theocheung, a senior analyst with The Diffusion Group (Dallas) and author of a new report on the topic.

Analysts have long predicted the rise of a category of systems that store and forward pictures, video and data for home networks and act as home automation hubs. To date the product concept has not materialized, but that's about to change, according to Theocheung who forecasts home server shipments rising from 1.2 million this year to 90 million in 2015.

"Our philosophy is early adopter enthusiasts are turning to PC-based systems, but the CE devices will bring home servers to the mainstream," said Theocheung.

A product from LaCie called the Ethernet Disk Mini, Home Edition is an example of smart storage appliances that are the first-generation consumer systems, he said. Sony and 2Wire showed at CES in January more advanced versions of such products, in Sony's case sporting a hefty $3,500 price tag.

"The opportunity to bring this to the mainstream comes when such devices come in at less than $500," he said.

Theocheung warned that the current Windows Home Server, based on Windows Server 2003, has reported bugs that can create problems dealing with digital media in configurations with multiple hard disk drives. An updated version is expected in July, and companies including Fujitsu-Siemens and Gateway are expected to roll systems based on it.

The market analyst said a new wave of home servers from CE companies will hit in 2010 that challenge the PC products. By 2012 the CE devices will make significant strides against the PC models.

Ultimately service providers will become a main conduit for providing the CE systems, outpacing retail sales of PC-based systems, Theocheung said. "Privacy may be an issue, but given the value proposition of service providers leasing these systems for perhaps an extra $5 a month, it's a manageable problem," he said.