MP3 files are compact (hundreds of bulky CDs can be stored on a portable hard disk) and easy to move among various audio devices. Finding specific songs and creating custom playlists is simple. Songs can be purchased from the Internet without waiting for physical delivery, and the right software enables a variety of low-cost and "try before you buy" distribution models.

Key to this future is a broad set of digital music devices that replace the tape decks, CD players and boom boxes you use today. Walkman-type MP3 players are already popular, and some car stereos are available.

Portable players have limited storage because of the use of costly flash memory. To solve that problem in the home, music will be stored in a central server on a hard disk. Disk space won't be a problem: a 20G drive, available for less than $100 today, holds 300 hours of MP3.

This server will be connected to the Internet and will probably contain a CD drive as well as a fairly powerful (more than 100-MHz) CPU. This unit will "rip" CDs onto the hard drive and download songs from the Internet. It can also receive Internet radio broadcasts.

The server will stream music to low-cost client devices that have no local storage-only a 32-bit CPU and a few Mbytes of DRAM. Those clients can be placed throughout the home using wireless, phone-line or power-line networks.

S3, with its popular Diamond Rio MP3 line, is leading the way in deploying this architecture. Its Rio Receiver, a client device, is available today. This device currently requires a PC as a music server, but S3 plans to market a standalone server this year.

Many people use the Web, but almost everyone listens to music. Digital music could be the killer app that drives both home networking and the use of new digital music devices. Those devices will create fast-growing markets for 32-bit microprocessors, memory and hard drives that could eventually rival the PC market in size.

LInley Gwennap is the Founder and Principal Analyst of the Linley Group (www.linleygroup.com), a Technology Analysis Firm in Mountain View, Calif.