Goods and services prices are actually falling in Japan, in what is being called "deflation," and Hewlett Packard announced on 7 March that it was cutting its low-end NT server prices targetted to telecoms and service providers in Europe by 28% -- another indicator that the softening is not restricted to the United States. In the midst of all this bad news, something good must be happening. And it is. But it's a quiet revolution taking place in the consumer arena, the transition to digital entertainment.

[NOTE: This article can be considered the third, and concluding, installment of the consideration that MOIA has given to this sector of technology development in recent weeks.]

Trend watchers have noted with interest the marketing-driven decision by Microsoft Corporation to drop date acronyms for its software upgrades and choose the subname "XP" for the new Windows release. The implied message is that this version of Windows will focus on the user "eXPerience." Then there is the new buzz and focus on appliances coordinated through a "Home Gateway," and the introduction of Microsoft's X-box, AOL Time Warner's "AOL Everywhere" initiative, and the focus of most media companies on compression technology for the set-top box. Who's going to deliver digital media to the home and your business in the most accessible and preferred manner? It's anybody's guess right now, but the prospectors are already covering the hills.

Along these same lines, the digital charge is also being made in an interesting space --- movie theatres. George Lucas is making his new Star Wars movie with digital cameras rather than the standard 35 mm film camera and the National Association of Theatre Owners is testing digital projectors. Along this same line, Philip Anschutz, a billionaire investor, has been buying up troubled cineplexes all over the country. The buzz is that --- even as the living rooms of America have been government-mandated to go to high definition digital television (HDTV) by 2006 --- the movie theaters just might see digital entertainment as a means of leveraging their under-utilized assets, expensive sound equipment, massive seating capacity and big screens.

The speculation is that Mr. Anschutz has recently invested in United Artists Theater Co., Regal Cinemas and is eyeing Edwards Theatres Circuit Inc. in order position himself for a sea-change in what these facilities offer.

Think digital for a moment and then think about live concerts, sport events, theaters exploring using their facilities for teleconferenced business meetings and even Broadway shows offered on the "off" days of most exhibitors today.

When's the last time you found a crowded movie theater on a regular week night? By most estimates, movie theaters are woefully under-utilized facilities that make the lion's share of their profits during 25 percent of the week, including holidays. Offering other types of events would not only increase their traffic, but given them theater chains greater leverage when dealing with Hollywood.

And as this digital conversion moves apace, Voice over IP (VOIP) an approach to telephony the business community has been familiar with for at least two years now, moves into the consumer space. Internet phone calls are just the beginning. Digital telephony won't be restricted to cell phones for much longer as the compression race and networking of all our digital applianes heats up.

The downside of this picture is that not all of these initiatives will pan out and many of them will be more costly than the systems they replace.

Take HDTV, for example. Many feel that there is not a discernible or compelling improvement in quality for the now-pricey equipment. Go to an electronics store in your city that offers both HDTV and the standard analog sets and see if you notice an appreciable difference --- especially one that warrants the price differential.

Much of AOL Time Warner's strategy is based on locking consumers into an array of premium add-on services that increase their monthly expenditure on entertainment and frills. Pay-per-view Jr. The assumption is that we will all buy into Internet access, VOIP, interactive TV applications, video-on-demand (VOD) and games or gaming because they are whiz-bang and we will be willing to shell out from $100 - $150 dollars to our "enhanced" digital cable service(s) as opposed to the $30- $70 dollars most consumers now pay.

And sometimes offerings are just plain vaporware. This Columnist was recently asked to take a look at the product demonstration of Forbidden Technology PLC, a UK firm that touts itself on amazing streaming video compression. (Follow the link and try the demo for yourself.)

Many of the claims of streaming media companies and their successes with compression remind me of a Nortel Networks television commercial now running. In the commercial, a young man is being prompted for his presentation via a broadcast quality PDA (personal digital assistant) connection with a woman back at his office. Watching this, I can't keep myself from thinking, Man! This guy must have gotten an advance-advance prototype of the Palm XV!

But then I also want one of those laptops that appear in Hollywood movies that never crashes, never loses battery juice, and is capable of cracking the code of an invading alien computer system in fifteen seconds flat....