Intel, the world's largest chipmaker, launched two new lines of chips in late June 2004. Code-named Grantsdale and Alderwood, the new chips are the “most compelling” changes to the way personal computers (PCs) work in “over a decade”. From here on, claims Intel, PCs will be “all-in-one hi-fi devices”, “entertainment PCs”, and “vaults” for digital content. Intel's vision is that consumers will start to use their PCs at home to download, store and manage films, songs and games, in order to transmit all this fun stuff wirelessly to TV screens and stereo speakers throughout the house.

Jen-Hsun Huang, the chief executive of NVIDIA, the world's largest maker of graphics chips says  "The new chips may turn out to be as important as Intel claims. They are an opening salvo in a battle between the computer and the consumer-electronics industries over who will dominate the digital household."

Intel, with a virtual monopoly in the chips that power PCs, naturally hopes that PCs will dominate and morph into “media hubs”. So does Microsoft, HP, Gateway, Dell and Apple. On the other side are the giants of consumer electronics. Sony wants future versions of its game consoles, rather than PCs, to play the role of digital “hub”. TiVo, a leading maker of digital personal video recorders (PVRs), has its own hopes for its machines.

Extrapolating from history, the PC industry would be the favourite to win, since it has the powerful and rich Microsoft on its side. In the past year, Microsoft has launched and re-launched its Windows Media Center, a version of its operating system that looks more like a TV menu and can work via a remote control. The one thing that all companies seem to agree on is that households will be connected to the internet via a broadband link that is always on, and that content will be shared wirelessly between rooms within the home.

Art Peck, an analyst at Boston Consulting Group, says that the real money in the digital home will be made by those providing a service or selling advertising. The hardware makers, he thinks, are therefore fooling themselves by thinking that any device can become a “Trojan horse” to enable them to capture the bounty. It is much more likely that they will all end up as makers of interchangeable commodities for the digital home, that the consumer cares little about unless the stuff breaks down.

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