(FORTUNE Magazine) – MP3/Audio player: Apple iPOD

Apple hit a high note with its first foray into consumer electronics. The gleaming stainless-steel and ice-white iPOD MP3 player is as small as a deck of cards and weighs just 6.5 ounces, but it packs a five-gigabyte hard drive capable of storing 50 hours of digital songs. Or, if you must, it can store mundane business files; with its high-speed FireWire connection, it can double as an external storage drive for your Mac. There are lots of cheaper MP3 players, but the iPOD rocks even at $399 because of its terrific sound quality, truly elegant user interface, speedy file transfers, high-quality earbud speakers, vast storage capacity, ten-hour battery life, and rugged, skip-resistant design. The iPOD requires Apple's Mac-only iTunes software, which makes it easy to manage your music collection. Another reason, perhaps, for Windows users to sing the blues.

Video: ReplayTV 4000 DVR

When ReplayTV introduced the original digital video recorder in 1999, it changed the way people watch TV. The DVR records video to a hard disk and lets users pause live programming, skip through commercials, record shows easily, and otherwise take control of how and when they watch programs. But you haven't seen anything yet. The new Sonicblue ReplayTV 4000 ($699 for a model that stores 40 hours of video, to $1,999 for a monstrous 320 hours) adds an Ethernet port for connecting to home networks and broadband Internet modems, PC connectivity for transferring digital photos to the TV, progressive output for sharper pictures on digital TV sets, and nearly automatic zapping of commercials. But get this: ReplayTV owners can also send recorded videos to one another over the Internet. Send Grandpa the video you made of Junior's basketball game, or ask a friend to send the episode of I Love Lucy that's not on your local channels. The network lawyers may hate it, but you'll love it.

Game console: Microsoft Xbox

Sony's PlayStation2 has more games, and Nintendo's new GameCube is cheaper, but Microsoft's Xbox is big and bad and simply the best. It's not a PC--but it's no toy either. The Xbox has an Intel processor, an internal eight-gigabyte hard drive, and built-in support for broadband Internet connections, which suggests it's Microsoft's Trojan horse for moving from the home office into the living room. But it can also play DVD movies (with a separate $30 adapter kit), and of course it plays some of the most stunning 3-D games we've seen anywhere. As more cool games emerge, including online ones that tap the machine's broadband capabilities, the Xbox will build on its very impressive debut. A base system is $299; extra games are about $50 each.

Mouse: Wireless IntelliMouse Explorer

So much for the one about the three blind mice whose tails were cut off with a carving knife. Microsoft's new wireless optical mouse ($75) is far from blind, with a little videocamera in its belly that captures up to 6,000 images a second. (The camera replaces the grungy rubber mouse ball in old-fashioned analog mice.) No other optical mouse offers more precise cursor movement or better responsiveness for routine tasks. But Microsoft has definitely lopped off its mouse's tail. The Wireless IntelliMouse Explorer uses radio signals to communicate with the PC, which means there's no mouse cable to get snarled. Instead, there's an extra mouselike radio receiver that plugs into the PC's USB port, out of sight. The IntelliMouse is a handsome animal, as mice go: slightly plumper to fit the hand better, with silver skin and a glowing red belly. We especially like the five programmable buttons and scroll wheel, which make it easier to navigate Office documents or Web pages. But rats: It's Windows only.

Product of the Year Radio: XM Satellite

Of all the new technologies of 2001, XM Satellite Radio is way, way, way above the rest. It's the first major advance in radio since FM emerged in the 1960s, and the best thing to happen to mobile music since the dashboard CD player. XM delivers a diverse selection of 100 digital channels--jazz, rock, news, bluegrass, sports, hip-hop, etc.--in nearly CD-quality sound, whether you're sitting in a Cadillac in the big city or in a pickup truck in the boonies. Think of it as premium radio: You'll need a special receiver that can cost $300 to $800, not counting professional installation, and the service is an additional $10 a month. On the other hand, you won't have to listen to commercials on many of the stations. If you spend a lot of time on the highways, you'll never go back to listening to stations that fade in and out and don't play your kind of music.

TV: Sony KV-40XBR700 Wega

First, it's pronounced "vay-ga," as in Vega, one of the brightest stars in the sky. After that, all you really need to know is that, at 40 diagonal inches, it's the biggest and best cathode ray tube (CRT) television in the world, and it weighs more than 300 pounds. CRT sets offer better brightness and image quality than projection TVs, but it's not clear how much larger they can get without requiring piano dollies. The flat Trinitron screen minimizes glare and distortion while improving focus and sharpness. The KV-40XBR700 is a high-definition TV monitor that can display up to 1,080 interlaced lines of breathtaking images. Sony's Digital Reality Creation circuitry enhances the resolution of any video source, and movies look sharp thanks to 3:2 pulldown technology. This beautiful beast costs $3,699.

Laptop: Apple PowerBook G4

Apple set a new standard in mobile computing when it introduced a titanium-skinned portable set in January, and it just kept getting better as the year progressed. The "TiBook" dazzles users and envious onlookers alike with its huge yet manageable 15.2-inch wide-screen liquid-crystal display (LCD), which, when paired with the standard slot-loading DVD drive, creates an unrivaled mobile multimedia computer and portable DVD player. The base model ($2,199) boasts a 500-megahertz G4 processor, a 20-gigabyte hard drive, an improved DVD-ROM drive, and Apple's new OS X operating system. But the real winner is the faster 667MHz model ($2,999) that offers 30 GB of storage, 512 megabytes of system memory, a 133MHz system bus, and a built-in Airport wireless-networking card.The battery is robust enough to last through most DVD movies. With battery and charger, the "TiBook" weighs just six pounds, and it's barely an inch thick.

Software: Apple OS X version 10.1

When Apple first released its completely rebuilt OS X Macintosh operating system in 2001, it was slow and missing fundamental Mac features like DVD playback and CD burning. But with version 10.1, Apple finally has a strong foundation to build on for years to come. Version 10.1 has a gorgeous interface called Aqua, but the real beauty is the underlying open-source code base, which boosts performance, speeds up application launching, and improves system reliability. It works seamlessly with digital cameras, camcorders, and the new iPOD music player. OS X 10.1 ($129) is a major advance in software, and it's going to get better.

DVD recorder: Pioneer DVR-A03

When movie historians look back on 2001, they may just reel with giddiness over the arrival of the powerful but relatively inexpensive tools that brought moviemaking to the masses: high-quality digital video cameras, inexpensive computer video-editing systems, and the Pioneer DVR-A03 combination DVD/CD-R/RW drive. The breakthrough A03 was the first affordable device that let amateur videographers burn their computer-edited movie creations onto blank DVD disks that could be played on standard DVD players. It's also great for backing up lots of data and for creating custom audio CDs from MP3 music files. Apple, Compaq, and Sony offer the A03 "superdrive" as an option on certain multimedia PCs, but it can also be added, for $649, to newer multimedia PCs. And here's some more happy news: The cost of blank DVD-R (write-once) disks has dipped to under $10; blank rewritable DVD disks, which cost $25 when the year began, are now down to $15.

Camcorder: Sony DCR-TRV30 MiniDV

There are scores of digital camcorders on the market, and Sony itself makes a bewildering range of models. So why is this one best? It delivers absolutely the sharpest video images (530 lines of horizontal resolution) of any consumer camcorder and also doubles as a 1.5-megapixel still camera for those times when a snapshot is better than a moving picture. The quality of the Carl Zeiss zoom lens is so good that it offsets the relatively stingy 10X optical magnification. The DCR-TRV30 ($1,799) has a large array of advanced features, but it's surprisingly easy to use. A selection of preset exposures with the built-in flash improves your odds of getting great shots under varied lighting conditions, like on the beach or indoors. There are plenty of video-editing effects like wipes and fades and sepia tones, if you're so inclined. Sony's image-stabilization technology really works to reduce jittery images, and the TRV30's nifty Super NightShot feature allows shooting in the dark. Its 3.5-inch, tilting color LCD is one of the most generous you'll see. Finally, it's lightweight and easy to carry.

Scanner: Epson Perfection 2450 Photo

Scanner prices continued to fall in 2001, bringing professional-level features down to the consumer price range. At the same time, scanners got easier to use, with simple USB and FireWire connections and one-touch image capturing. Epson's top-of-the-line home scanner, the $399 Perfection 2450 Photo, is the best way to transfer your photo albums into your computer, including prints, 35mm slides, and negatives. The flatbed scanner boasts true 48-bit color depth (the more bits, in general, the more precisely colors are rendered), honest 2,400-dot-per-inch image resolution (more sensors allow more image detail), and great dynamic range (the ability to pick up details in the lightest and darkest areas of a photo). The result: The 2450 Photo can capture a 35mm slide with enough fidelity to make an eight-by-ten print. Plus, it's fast and built like a tank.

Software: GoToMyPC

This clever Web-based, screen-sharing Internet service makes it easy to gain access to your Windows-based PC from any Internet-connected computer anywhere in the world, for a fee of $10 a month. If you're traveling and need to check your e-mail, run a special program, or fetch a file from your home PC, just log on to www.gotomypc.com, enter your password, and bingo, you have complete control over the remote PC and its network resources. Or work on your office PC from home, in your pajamas. All the communication between the host and remote PCs is encrypted, so there's little security risk. GoToMyPC works best with a broadband Internet connection.

Desktop computer: Dell Dimension 8200

There was never a better year to buy a personal computer, and one could argue that there was never a better personal computer to buy than the Dimension 8200. Built around Intel's fastest Pentium 4 microprocessors, the 8200 delivers the most impressive balance of power, value, and reliability in the consumer category. Stripped-down 8200s are available for as little as $799 (without a monitor), but the system we fell in lust with cost nearly $3,000 and had a two-gigahertz Pentium 4 chip, 256 megabytes of fast Rambus memory, a 120-gigabyte hard drive, a DVD-ROM drive, a CD-RW drive, a geForce3 video card with 64MB of its own memory, and a fancy sound card. It was even festooned with a remarkably sharp 19-inch monitor and a set of Harman-Kardon HK-95 speakers. The handsome gray-and-black tower case is also easy to open, for those inclined to stock the expansion bays with more extras. But for all its power, the 8200's most impressive feature is Dell's vaunted customer support and on-site service policies, unmatched in the industry.

PDA: Compaq iPAQ 3800 Series

Compaq has already sold a million iPAQ personal digital assistants in a category dominated by the Palm operating system, and the new 3850 model is bound to gain even more ground. Improvements include a brilliant 64,000-color TFT display, longer battery life, a Secure Digital (SD) expansion slot, and Microsoft's impressive new Pocket PC 2002 software. The 3850 ($599) works tightly with Microsoft Office applications and doubles as voice recorder, music player, and e-book reader. The 3870 model adds Bluetooth wireless connections. We've got to hand it to Compaq: It has another winner.

Software: Microsoft Windows XP

It's probably inevitable that you'll end up using Microsoft's new operating system software before long, so it's a relief that Windows XP is more reliable than previous versions of Windows and much easier to use. It crashes less, and it boots up and shuts down faster--reasons enough to warrant kudos. Windows XP has some controversial features like Product Activation (to reduce piracy) and Passport (which gathers personal information and stores it on Microsoft's computers), but it also makes it easier than ever to share the PC among family members, set up home networks, communicate, and work with media files. The Home Edition upgrade is $99.

Digital camera: Minolta Dimage 7

This may have been the year that consumer digital cameras finally reached parity with "old-fashioned" film cameras. There were so many clever new digital cameras introduced that the choice for best of the year came down to a photo finish. Although other cameras have since matched or passed it in terms of image resolution, the Dimage 7 was the first consumer digital camera to crack the five-megapixel barrier. No consumer camera we've seen, however, can match the Minolta's impressive 7X optical zoom lens--the equivalent of a 28mm wide-angle to 200mm medium telephoto lens on a conventional 35mm camera. (If terms like f/2.8 and 12-bit A/D conversion make your eyes go out of focus, this is not the camera for you.) In short, the $999 Dimage 7 delivers brilliant digital photos that will satisfy the most demanding amateurs, especially if they take advantage of the camera's extensive controls and special image-editing software. It also supports IBM Microdrive storage--important with such huge files.

Multimedia speakers: Klipsch ProMedia 5.1

Klipsch's new 5.1-channel ProMedia PC surround-sound system delivers the cleanest, punchiest audio we've ever heard from a computer. The $399 system includes a center speaker, four satellites, a dual-driver eight-inch subwoofer, and a control tower for managing all 500 watts of power. You'll need a PC sound card capable of driving six speakers, but if you've got that, your MP3s, audio CDs, DVD movies, and games will blow you away.

Worst products of the year

Even in a category that normally abounds in deserving candidates, competition was especially fierce in 2001 for the booby prize for worst tech product.

Take Digiscents, please. The company, which stopped breathing earlier this year, actually raised $20 million in venture capital to further its plan to deliver smells over the Internet to a PC peripheral device called iSmell.

A special group award goes to Internet appliances. Several of these simple-minded home PCs went belly up in 2001, including the NetPliance iOpener, 3COM's Audrey, Dell's Webster, and Gateway's AOL Companion. Sony's bizarrely named eVilla deserves special recognition for being introduced and killed in the same week.

Some curmudgeons will seek to honor Microsoft Passport, the latest scheme to persuade millions of consumers to store their most intimate personal and financial data, including credit card, bank, and brokerage account numbers, along with passwords, on Microsoft's own computers. Microsoft promises not to peek at the information and says people shouldn't be concerned about the hacker break-ins to its computers earlier this year. We disqualified Passport because, alas, it works.

And that brings us up to the dirty-hands-down winner for Worst Personal Technology Product of 2001: The FBI's Magic Lantern surveillance program. Frankly, we're not even sure it exists, but the mere idea warrants derision. According to our spooky sources, Magic Lantern is a bastard offspring of the agency's DragonWare program, which also begat the Carnivore e-mail-sniffing software. Unlike Carnivore, which requires the cooperation of Internet service providers, Magic Lantern can be deployed to target PCs as an e-mail Trojan horse program. Once installed, it captures keystrokes, including passkeys for encryption programs.

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