We're kicking off the first five weeks of 2005 by profiling five promising innovations on the verge of exploding into the mainstream in the new year. It's our way of introducing you to our new Motley Fool Rule Breakers newsletter service, which singles out tomorrow's great growth stocks early in their disruptive stage. That's the point in their development where these products are poised to reshape our lives. It's also the point where a few dynamic, forward-looking investors make decisions upon which fortunes are built.

You know all about (and probably dread) housework, but what if your house worked for you? Implementation of this idea has begun. Consider broadband, Wi-Fi, VoIP, digital cable, cable-telephone, DVRs, and even gizmos such as Roomba, a vacuum that exhibits a little bit of smarts, all sneaking into our homes.

As we mine for growth stocks in Motley Fool Rule Breakers, we are exploring the disruptive technologies that are set to explode over the course of 2005 and the future. And when it comes to the home automation industry, we're looking at the beginning of a curve that will change the way we all live.

Smart homes may sound like a gimmick that appeals only to Generation X and younger techno-types who have loads of discretionary income. Think again. The technology has a lot more going for it than simply "cool points." We're looking at revolutionary advances in terms of safety, security, and utility.

However, when you think about it, our increasingly aging population will likely enjoy the conveniences that smart homes can afford, not to mention the importance for adult children who want to keep abreast of their aging parents. The senior generation may end up being an extremely important demographic for such technological advances. It's not just about a gadget akin to The Clapper -- imagine the usefulness of a system that could send out an alert if certain basic household appliances weren't operated first thing in the morning, for example, giving the clue that maybe something's wrong in an elderly relative's residence.

In the meantime, some companies are finding ways to make smart home technology cheaper all the time -- which will bring it closer to home. All of this makes it an interesting and compelling area for investors to watch.

Maybe you missed the last tech run-up
Sure, during the "boom times" of the late '90s, we might have all heard a little too often how we were all going to be living like the Jetsons. Right as the recession took hold, there was lots of talk about innovations such as BlueTooth and Wi-Fi that faded out, put on the back burner for better days. Well, the recession did put a crimp into the breakneck speed of development and adoption, but we're getting back on track.

There are already signs that such a transition is about to take place. These technological mileposts include such simple, elementary trends as widespread broadband adoption, home networking, wireless networking, and the like.

Devices such as TiVo (NASDAQ:TIVO) already allow us to have unprecedented control over a device that has been dominating our living rooms since 1960, when televisions had been adopted in 85% of homes. (In the 1990s, FCC statistics show that 99% of households had at least one TV.) Indeed, you can already program your TiVo to record programming remotely, and just recently, TiVo announced a new feature that allows you to take your programming with you, a service that uses the whole idea of convergence with home computer products.

Believe it or not, one of the best-known names in home automation is X10. (Yes, that X10, the company that used to annoy us a couple years back with those slightly sketchy pop-up ads for what looked like spycams.) X10 USA is privately held, owned by a Hong Kong-based company called X10 Ltd.

Although X10 has been a standard in allowing people to automate appliances such as coffeemakers and lighting in the home, using simple plug modules into electrical sockets, there is a new standard on the way, called Insteon. Insteon is a protocol from a company called SmartHome (also private), which will offer its first products this year. It will allow you to perform such functions as turning TVs on and off, operating microwave ovens, and using integrated security systems from afar. The Zigbee standard is another popular protocol for home automation devices.

Also, there's a new name in home automation, according to a recent issue of Wired magazine -- a start-up called Control4. It's developing products through which homeowners can automate their homes, regardless of when they were built. (The age of homes was a previous stumbling block to the incorporation of home automation.)

Control4 is also trying to bring affordable products to market -- which could change the whole landscape. Given Control4's influence, this type of technology may soon be available in more median-priced homes than ever before, bringing smart homes closer to Main Street -- of course, by helping bring down the currently high price tags associated with the technology.

Keeping up with Mr. Rogers, Twiggy, and their robotic dog
There are also plenty of familiar names that are involved in this whole scene. In addition to those such as Microsoft and TiVo, there's a group called Internet Home Alliance, which includes big names such as Cisco (NASDAQ:CSCO), IBM (NYSE:IBM), and Hewlett-Packard (NYSE:HPQ), underlining the interest in being part of the wired home and its powerful benefits for homeowners.

Meanwhile, Salton (NYSE:SFP) recently made headlines with its Beyond line of appliances, including bread makers and microwave ovens that download Internet data and take their commands from computers and wireless gadgets. Look for an increasing incidence of appliances you can control from the Internet.

Another company to put on a possible watch list in this arena is AMX Corp. (NASDAQ:AMXC), a small-cap company with an admittedly thinly traded stock that makes one-touch solutions for commercial and residential home automation solutions. Seeing how it's a pure play in this emerging sector, it might bode some closer attention as the market develops. Another publicly traded (and also small-cap and thinly traded) play is Echelon Corp. (NASDAQ:ELON), but with its P/E ratio of 172, and sales and earnings that have recently gone down, right off the bat we've got some pretty major red flags to be wary of.

The next run-up could be right around the corner
According to research from ABI, the home automation market is a $1.5 billion business right now, and the prognosis is that it could more than double by 2008. However, my personal feeling is even more enthusiastic when I think of some of the trends at hand -- such as the ways to help improve the lives of a large and aging generation, not to mention increasing use of and comfort with technology used to ease the frantic nature of our everyday lives.

True, the techno-savvy have been saying for years that soon, homes will be automated; most of us would say that "soon" has obviously not come soon enough. But what with the increasing ubiquity of broadband connections and more homeowners networking their machines, we are moving quickly toward that reality. Here at Rule Breakers, we'll be ever alert for companies that are idling on the launchpad and the market's willingness to start their countdowns and release them skyward.

Don't miss out -- we currently have a limited-time, free trial offer on our Rule Breakers service, which highlights growth stocks poised to explode and provides a variety of tools for use in your growth strategy. Our current offer also includes a copy of Stocks 2005 . For details, click here.

Alyce Lomax does not own shares of any of the companies mentioned.