The PC is changing. Once simply a computer with spreadsheets for the family budget and games for the kids, home PCs are rapidly evolving into home entertainment systems, equipped with digital television tuners, high-definition displays, and other features drawn from consumer electronics.

Globally, media PCs represent a fraction -- just five per cent -- of desktop computer sales, said Eric Kim, senior vice president and general manager of Intel's Digital Home Group, during a speech at the Ceatec exhibition in Chiba, Japan. While media PC sales are relatively small at present, they will represent 30 per cent of desktop sales by 2008, he said.

While the rest of the world slowly warms to media PCs, the systems already dominate computer sales in Japan. "More than 60 per cent of desktops sold in Japan today are already some kind of media PC," he said.

Media PCs are big sellers in Japan because most homes here are small, putting a premium on the use of space. As a result, home PCs usually double as an entertainment system, making computers with these features popular among end users.

This love affair with the media PC was readily apparent at Ceatec, where local PC makers showed off their newest products. At NEC's booth, the company showed off its Valuestar X PC, which will be available later this year for ¥543,000 ($2,440). Based on a 3.4GHz Intel Corp. processor, the water-cooled PC offers dual 250GB hard drives, a Blu-ray disc drive, and a 20-inch widescreen LCD (liquid crystal display).

At Sony's booth, the company showed several Vaio PC models that had home-entertainment capabilities. One of them, the Vaio Type L VGC-LA915 integrates the components of a computer into the back of a 19-inch widescreen LCD screen. The computer, which is priced at ¥359,800 includes a Blu-ray Disc drive and remote control for watching high-definition movies. A smaller version with a 15.4-inch display, includes an attached keyboard that can be folded up against the display to save space.

In addition to packing consumer-electronics features into their latest products, Japanese PC makers are also looking ahead, playing with new designs further tailored to the interests of end users. One such design is Fujitsu's Turn Table PC, which adds the ability for DJs to spin and scratch using digital media files. The design, which may never enter production, calls for a 20-inch display that can be folded down to use the turn-table function.

Outside of Japan, sales of media PCs will likely be driven by factors other than a desire to maximize the use of space in a home, said market analyst IDC in a recent report. Sales of media PCs will take off once a wider variety of content, especially video, is made available to end users, it said.

"The potential for that success is evidenced by iTunes' sale of 125,000 Disney movies in the first six days of its service offering," the report said, referring to Apple's recently introduced video download service.

Shipments of media PCs are expected to grow at a compound annual rate of 41 per cent through 2010, when vendors will ship 27.5 million units, IDC said. This year, PC makers will ship 5.9 million media PCs, worth around $6 billion, it said.