Just a few years ago, the PC and consumer-electronics industries served separate and distinct markets that only rarely bisected in products such as portable audio players. But the convergence of these two industries—long seen as inevitable—is happening today at a faster rate than ever before. PC juggernaughts such as Apple Computer, Dell, Gateway, HP, and Microsoft are embracing consumer-electronics products at heady speeds. In some cases—Apple and Gateway, for example—recent forays into consumer electronics are helping offset the faltering growth of their traditional computer-related offerings. In the cases of other more dominant players—Dell and Microsoft come to mind—consumer electronics represent yet another market to conquer, a way to keep sales growth moving at a steady clip during an economic slowdown that's bitten IT spending. These companies are augmenting, rather than replacing, traditional PC product lines, and are prepared to take their places alongside the giants of the traditional consumer electronics world.

On the consumer-electronics side, long-standing market leaders such as Panasonic, Samsung, and Sony are abandoning their former isolationist strategies of releasing product lines that work with other companies' products but work better with those from the parent company, thanks to proprietary connectors. Today's consumer-electronics products are not only embracing wired and wireless networking as a way to connect to other devices and services both locally and over the Internet, they're connecting to back-end PCs in the home office to let you consume digital media in more comfortable rooms anywhere in the home, in cars, and in various portable devices. This trend makes sense: A PC excels at media-acquisition and editing tasks but a home office isn't the most comfortable place to watch home movies or view photo slideshows.

At the 2004 International Consumer Electronics Show (CES), held earlier this month in Las Vegas, the focus had clearly shifted from stereo-component and home-theater makers to a more balanced mix of connected consumer electronics and computer products, many of which now work together in seamless ways. And the CES audience was huge, dwarfing specialty trade shows such as CEDIA (which is geared toward high-end component installers) and even massive business-oriented trade shows such as COMDEX (which has fallen on hard times in recent years). This year's CES was larger than any trade show I've ever attended, including those at the height of COMDEX's popularity in the late 1990s. Not only did CES fill up the vast North, Central, and South Halls at the Las Vegas Convention Center (LVCC), the show spilled out into two large but temporary structures erected in the LVCC's parking lots, displacing thousands of vehicles and adding several hundred thousand square feet of convention space. The show was packed with people, and we often had to fight massive crowds just to move slowly from booth to booth. For gadget geeks like us, CES was absolutely the place to be to see this year's most exciting products up close. Here are some of the best products we discovered this year at CES 2004.

Digital Media Receivers
Microsoft was pushing a marketing message called "Seamless Computing" at CES 2004, but a more inclusive (and less techie) term might be "Your Media, Where You Want It, When You Want It." Many companies introduced inexpensive hardware solutions called digital media receivers, which let you use standard, cheap, home networks to remotely access your PC-based digital photos, music, and movies from any TV in the house, at any time. A few years ago, expensive digital audio receivers such as the Turtle Beach Audiotron performed these duties for music, but today's digital media receivers are more powerful, more compatible, and much, much cheaper. Some of the devices we saw were slaves to more powerful set-top boxes, instead of PCs, letting you remotely access recorded TV content from, say, a TiVO or other digital video recorder (DVR).

The Hauppauge MediaMVP is an inexpensive digital media receiver. You can position this tiny device near any TV set and Ethernet connection, and it provides a simple remote control-enabled UI for accessing digital media stored on a PC elsewhere in your home. Hauppauge is also working with Snapstream to provide access to TV content you've recorded with that company's BeyondTV, which brings DVR functionality to virtually any PC.

Media Center PCs and Windows Media Center Extenders
The first generation of Media Center PCs based on Windows XP Media Center Edition (MCE) suffered from the types of instability concerns you'd expect from a 1.0 release running on top of Windows. But the current XP MCE 2004 is much more stable, and it's accompanied by a new line of second-generation Media Center PC hardware, much of which looks more like stereo componentry than a standard PC. Some PC makers, notably HP, are still shipping ugly mini-tower PC designs that don't look right on or near your TV, but other companies, such as Gateway and Viewsonic, ship far more component-friendly units. Our favorite Media Center PC is Gateway's stunning FMC-901, which would look at home next to high-end Harmon Kardon stereo equipment. The FMC-901 also comes in a bargain-basement version that starts at just $999, almost half the price of a comparable Media Center PC from a year earlier.

Many people won't want a PC in their den or family room—no matter how attractive it is. To satisfy these customers, Microsoft's hardware partners (both PC makers and traditional consumer-electronics companies) will release new Windows Media Center Extender devices, which are essentially digital media receivers in set-top box form that work specifically with Media Center PCs. Three types of Windows Media Center Extender solutions will be available: dedicated set-top boxes from various hardware makers, TVs with integrated Media Center Extender capabilities, and a software add-on for Microsoft's popular Xbox video game console. We previewed set-top boxes from Alienware, Gateway, HP, and Samsung. The Gateway box is nicely styled, like the company's FMC-901 Media Center PC, whereas the Samsung is vertically oriented, with a router-like look. All the units are quiet, fan-less set-top boxes with few moving parts and none of the complexities of a typical PC. They'll come fairly cheap as well, though final pricing hasn't been set. Expect to see them on store shelves in time for the holidays.

Your Media to Go: Portable Media Center Devices
Various consumer-electronics companies will also support Media Center PCs with a cool new line of small mobile devices called Portable Media Centers. These devices, produced by Creative, I-River, and Samsung, provide the Media Center UI in a tiny form factor, and—thanks to a bundled 20GB-to-60GB hard disk—can store thousands of photos, songs, videos, and recorded TV shows. Samsung's device caught our eye with its square shape and pocket-friendly size, but any of these devices are sure to have gadget freaks bumping into each other to be first in line to buy. Creative's Portable Media Center will include a bank of top-mounted buttons that work like radio presets: Navigate to a favorite movie, cue up a photo slideshow, or bookmark a point in a recently recorded TV show by pressing and holding one of the buttons. The next time you press that button, you're back where you left off.

The Portable Media Centers also feature a new patent-pending horizontal navigational model that makes Apple's iPod UI look quaint. On a traditional portable device such as the iPod, you must press a menu button to go back "up" in the navigational chain. For example, if you're playing a song from a playlist but want to navigate to another playlist, you must press a menu button to go "up" to the current playlist, then press it again to go up to the list of playlists. On a Portable Media Center device, you can also navigate left and right—or more appropriately, forward and back—at any point in the UI. So if you're playing a song from a playlist and would like to sample a song in the next playlist, you can simply press the right menu button and you're there: no need to navigate back up through the menu hierarchy.

Smart, Entertaining Cars
Enterprising third parties have always searched for ways to integrate leading-edge computerized technologies—including entertainment (radio, cassette, CD, DVD), global positioning services (GPS) and telematics, integrated cell phones, and various low-level systems that monitor and control a car's behavior—into vehicles. This year, BMW, Honda, Mercedes-Benz, Toyota, Volvo, and other carmakers are offering full automotive computing solutions in a variety of car models that combine many of these capabilities into a centralized console. By late 2004, we should be seeing Wi-Fi-enabled automobiles that can synchronize with PC- and television-based media content in your home, giving you access to your digital music, videos, and recorded TV shows while you're on the road.

Smart Watches
Watches based on Microsoft's long-awaited Smart Personal Objects Technology (SPOT) are now shipping, with companies such as Abacus, Fossil, and Suunto supplying consumers with a variety of watch styles and price points. P>These Smart Watches run the MSN Direct subscription service and connect wirelessly to back-end services that supply the watches with weather updates, sports scores, near-instant messages, a variety of intriguing watch faces, and much more. SPOT watches will be a must-have geek gift throughout 2004.

Smart Phones
Cell phone sales surpassed pager sales in the late 1990s, but today's smart phones—which add rich color screens, PC integration, cameras, wireless instant messaging (IM) capabilities, detailed action games, Internet access, and other high-end services to the standard services that cell phones offer—are poised to put their predecessors out to pasture as well. Smart phone designs are as varied as the companies that make them, but virtually every cell phone carrier now offers a huge selection of smart phones, any one of which will make your old Motorola Star-Tac look like yesterday's news.

The big news in early 2004 is that smart phones based on Microsoft's Windows-Powered Smartphone technology are finally shipping in the United States, and more are due throughout the year.

Windows-Powered Smartphones offer a Pocket PC-like experience with an interface that's optimized for use with a small screen and one hand, and offer the type of Microsoft Outlook email, calendar, tasks, and contacts integration you'd expect. Our favorite phone is the Motorola MPx200, which is compact, gets great battery life, and offers a keypad that's superior to other smart phone models. The device's one limitation—it doesn't include an integrated camera—will be remedied by midyear when its replacement ships. Windows-Powered Smartphones are currently available through AT&T Wireless and Verizon, but other services will be jumping on board soon.

Widescreen TV Displays: LCD, DLP, Rear-Projection, Plasma
Companies such as Mitsubishi, Panasonic, Samsung, Sharp, Sony, and Toshiba showed off a wide range of TV sets, using a variety of technologies, case designs, and integrated PC capabilities. We saw sets with media readers that can display digital photos directly from a digital camera's storage card, and televisions that double as PC monitors. Regardless of the maker, today's TVs generally fall into one of five technological areas.

On the affordable end, we saw traditional tube-based TVs, which are flatter than ever but are still thicker than other types of displays. However, today's tube-based TVs do offer flat screens for wide viewing angles and generally feature the richest displayed colors. Next up from the tube sets are traditional rear-projection sets, which are typically quite deep but offer huge screen sizes for relatively little money, and high-end sets are HDTV-compatible. Just above rear-projection displays are Digital Light Processing (DLP) sets, which feature projected, all-digital displays that offer better clarity than rear projection for a bit of a premium. At the high end are LCD and plasma displays, each of which offers unique advantages. Both are generally high quality, but LCD provides superior image quality. Plasma, however, is available in massive sizes, up to a whopping 80", big enough for the largest home theatre. Both LCD displays and plasma screens are extremely thin and wall-mountable, giving you back valuable real estate in the rooms in which you'll use them.

iPods, MP3 Players, and Online Music Stores
Apple wasn't at CES, but its popular iPod portable audio player stole the show when computing giant HP announced that it would license the iPod from Apple and ship a copy of Apple's iTunes music software with every PC it makes.

The iPod isn't the only portable MP3 player, however, and competition from companies such as Creative, Dell, and Sonic Rio should keep Apple busy throughout the year.

Our favorite hard disk-based MP3 player is the Dell DJ, which ships in 15GB and 20GB varieties. For the ultimate in portability, the tiny Beatsounds MP3 player—about the size of a half-dollar coin—can be worn on a necklace and yet offers 128MB or 256MB of storage. It's also pretty cool looking.

RealNetworks announced its nice-looking Real Music Store, which offers songs for the standard fee of 99 cents and albums for $9.99. But the gold standard for such services is still Apple's iTunes Music Store, which features the cleanest designs and full compatibility with the iPod.

DVD Recorders
Tape-based VCR sales are receding into distant memory, and although DVD players can certainly fill the video-rental void, they don't do much to overcome the other benefit of VHS: recording.

One good solution that's gaining popularity is the DVD recorder set-top box, which offers a DVD drive that can play back Hollywood's latest blockbuster like any DVD player but also record TV shows to write-once (DVD+R) or write-many (DVD+RW) disks. DVD recorders are still a bit expensive, as are blank disks, but they're decidedly more high-tech than VHS and offer excellent quality.

DVRs and HD Satellite Services
Another up-and-coming VHS-recorder replacement that will likely hit critical mass in 2004 is the DVR, which is most often associated with the market-leading TiVo family of products. DVRs let you record TV shows to a hard disk inside the device, then access your library of recorded TV shows from an onscreen menu.

The TiVo is still the DVR of choice, and newer models offer network-based integration with the digital media on your home PC so you can, for example, display photo slideshows from your PC on your TV.

The holy grail of DVRs is, of course, HDTV compatibility. At least one service—Cablevision's VOOM satellite system—will debut HDTV DVR capabilities this year.

Some DVRs also offer a combination of hard disk and recordable DVD, so you can permanently archive shows to disk and free up space on your DVR's hard disk.

Video Cameras
Home-video recorders transitioned from analog formats to digital in the late 1990s, and now you can choose between a variety of high-quality formats—some tape-based, some optical disk-based—that should meet any need. For most people, Mini-DV and other digital tape formats probably still make the most sense, but companies such as Sony are starting to experiment with units based on CD, DVD, and mini-DVD disks, which offer durability and battery-life advantages over tape-based recorders, and do away with the tape-hum audio problems that plague traditional video cameras.

Either way, you can easily connect any digital camcorder to a modern Macintosh or PC, record and edit the video, then share it over the Web, email, or home network. You can even make your own DVD movie. Things have certainly changed since the days of Compact VHS (VHS-C).

Something Old, Something New
CES was an amazing amalgam of technologies from an almost countless number of companies. The show held a promise of interoperability that surpasses anything we've yet seen in consumer electronics. We enjoyed looking over some of the historical kiosks at the show—one highlighted Sony's ill-fated Betamax, the source of one of the biggest misconceptions in consumer-electronics history. Most people believe Betamax lost out to VHS despite the fact that Betamax was superior. But the real reason Betamax lost was that VHS offered 2 hours of recording time, whereas Betamax offered just one. In this sense, VHS won because it was, in fact, superior to the competition. By the time Sony shipped a 2-hour version of Betamax, retail locations and video rental shelves were already stocked full with Hollywood movies and blank tapes in VHS format. We don't think we'll see a splashy failure like Betamax today, if only because interoperability—not seas of isolation—is the key to success, and the companies we saw at CES clearly understand that notion.