The rapid rise of digital media players such as Apple's iPod is spurring the adoption of consumer electronics servers that can deliver digital content to connected devices throughout the home.
While Wi-Fi enabled devices are early in their adoption phase, ABI Research believes that a "significant factor" contributing to the growth of this market will be network-based sharing.
Another important factor will be synchronisation between the network portable music market and the network home audio market.
The analyst firm estimates that the networked home audio market will hit $7.2bn by 2012.
"Early entrants into this market provided user-friendly systems and have enjoyed loyal, but small, clienteles for their products," said ABI Research director Michael Wolf.
"However, the entire profile of connected entertainment received a significant boost when Apple went beyond a single networked audio solution (Airport Express) to the release of the much more capable Apple TV.
"Apple TV has created a tsunami of additional consumer interest and corresponding vendor activity in the connected entertainment market."
Wolf explained that the market for networked home audio consists of audio and media servers from the likes of Escient, Sony and AMX, as well as connected client devices from a variety of vendors such as Roku, Linksys and Netgear.
The analyst also highlighted Reciva Wi-Fi radio-based systems which can connect to a PC, dedicated audio server or directly to the internet.
Established players in home audio and consumer electronics such as Yamaha and Sony have joined as early contenders, but Wolf believes that the market will take some time to develop.
"One of the key driving factors will be lower prices for dedicated audio/media servers," he said.
"Today a typical audio server can cost anywhere from $1,000 to $10,000. As large vendors bring scale to the market, we expect the average price of audio/media servers to drop to below $1,000 by 2010 and to be close to $500 by 2012."
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