(MONEY Magazine) – When I look into my tech crystal ball to Year Four of what Bill Gates has dubbed the "digital decade," I see a dance floor so crowded that everyone steps on everyone else's toes. Telephone companies want me to pay to surf the Web and read e-mail on my phone. Never mind that I already pay to do the same thing at home--on a much larger screen. Meanwhile, computers and home entertainment devices are increasingly competing for the same turf. Even Microsoft, the techiest of tech companies, has a Media Center version of its operating system. HP has its own Media Center PC, while offerings from AlienWare and Gateway are in the hopper. And speaking of Gateway, it's now selling a 42-inch liquid plasma display.

So what should you keep an eye on this year? Below I look at important trends in six critical areas: broadband, home entertainment, PCs, handhelds, cell phones and wireless networking.

Broadband. Still puttering along the Web at 56Kbps (or less)? Then this is the year to go broadband. According to the consulting firm Yankee Group, only 18% of the country's 106 million households subscribe to high-speed services like cable or DSL. Another 6 million will sign up this year, and when they do they will feel like they've turbocharged their PCs. Downloads are blazingly fast. Bouncing between websites is like flipping pages in a magazine. But the thing I've come to appreciate most: I can send high-resolution digital grandkid pics to my in-laws. And since they too have a high-speed connection, they can quickly download the shots and print them at their leisure. It has made me very popular.

For most people, the problem with broadband is cost--usually $40 a month for cable and $50 for DSL. While big price cuts aren't likely this year, there will be discounts. For example, Cox Communications in Las Vegas lets users connect at 256K (about four times faster than a traditional modem but one-fourth the speed of a typical cable connection) for $30 a month.

Home entertainment. This year the Super Bowl and the NBA and NHL playoffs, as well as NCAA and Monday Night Football, will be broadcast in high-definition television. For movie and sports fanatics like myself, that means one thing: It's officially time to check out HDTV.

Because I love movies, I want a wide-screen set--one with the 16:9 aspect ratio movies are shot in. When it comes to wide-screen HDTV, the three most popular types of monitors are liquid plasma, liquid crystal display (LCD) and digital light processing (DLP). In my house, we watch too much TV for liquid plasma, which has a life span of 10,000 hours. Leave it on six hours a day, and in five years your plasma investment is dust. LCD sets are still way too expensive to merit my consideration, with the largest--a 40-inch model from Samsung--costing a whopping $10,000. That means wide-screen HDTV sets with DLP technology like those from Samsung (see the photo at right) are my best option. These TVs use chips from Texas Instruments that employ hundreds of thousands of microscopic mirrors to deliver the images. They're thinner and weigh far less than traditional HDTV sets, and the picture is fantastic. Best of all, they're cheap (relatively speaking): While a 50-inch liquid plasma set goes for about $8,000, you can get a 50-inch DLP for $3,000.

Meanwhile, the next stage in home video has arrived with Panasonic's DMR-HS2 (see Buys on page 109). This $1,000 device combines a DVD recorder with a 40GB hard drive so you can store programs and movies temporarily (on the hard drive) or make permanent copies of them (on DVD). As more of these hybrids hit the market this year, prices could drop by 20%.

Another entertainment device I'm really looking forward to is the digital media receiver, coming later this year from Philips. This gizmo promises to receive MP3 and video files from your computer and play them through your stereo or home entertainment system. Look for it in time for the 2003 holidays.

Computers. PC makers' woes continue and that, my friends, means 2003 will be another very good year to buy a new computer. You'll find machines with 2GHz of power for well under $1,000. And you'll continue to see special financing packages and PCs bundled with larger monitors, printers, digital cameras, even puppies. Okay, I'm kidding about the puppies, but you get the idea.

You'll also be seeing a lot of ads for tablet PCs. My advice: Ignore them. Why pay more than $2,000 for what's essentially an underpowered laptop that lets you write on the screen?

I'd also take a pass on Bill Gates' newest pet project, smart displays. These 15-inch flat-panel monitors can be detached from your desktop and used to surf the Internet wirelessly or as tablets--like a tablet PC. They're hitting the market at $1,300. Check back in two years when they're $650.

Handhelds. As with PCs, demand for handhelds--Palm organizers and pocket PCs--has cooled significantly. So I can go to Handspring.com or Palm.com and buy one with 16MB of memory for $199. (Given the age of my Visor Platinum, I just might.) Over the holiday season, in fact, Handspring gave away free DVD players to buyers of its Treo line.

There's also good news for those of you who've been shopping for a pocket PC. Now that Dell has entered the market at $199, you can rest assured the prices of competing devices will come down as well. In other words, if you find yourself in need of a new handheld in 2003, have at it. But I would think twice before buying communications devices like the Handspring Treo 300 or the new Palm Tungsten W, which should hit the market in the first quarter of this year. These things are not only expensive, at $499 and $550, respectively, but they also require monthly service contracts to use all of their features. Given the high, often complex fees, they're not something I'd recommend to the typical consumer.

Cell phones. Third-generation wireless--3G--has finally arrived, with service available from Sprint, Verizon and a handful of other carriers. Prices for 3G services were once prohibitive. But financially strapped telephone companies, desperate to suck in new users, have cut fees significantly in the past few months. Sprint, for example, now offers an introductory price of $30 for 300 anytime talk minutes and unlimited data access for the first three months, increasing to a still reasonable $40 thereafter. But price cuts don't address the biggest problem with 3G: Do you really want to be composing e-mail with a numeric keypad or surfing the Web on a tiny screen?

Wireless home networking. There are now more than 30 million multiple-computer households in the U.S. Folks in those homes usually want to do two things: share peripherals like printers and get their machines to talk to each other. That's why the number of people using wireless networks to connect their home computers will double to 12 million in 2003, according to analysts at research firm In-Stat/MDR.

If you're setting up a home network this year, you'll have more options--and more potential confusion. Most wireless networking devices, like Apple's Airport, use a standard known as 802.1 1b. If all you want to do is get two computers in your house to talk to each other--and you don't plan on sending enormous files back and forth--802.11b is just fine. But if you want to link four or five machines, or swap big video files, look for devices running on a newer standard known as 802.11a, which can handle much more traffic. This spring yet another, called 802.11g, is expected to be approved. It is compatible with 802.11b and about five times faster.

A final note. Security cavities in Microsoft's Windows, new viruses sprouting up for Apple's OS X and the fact that more people will be taking advantage of Web services mean that practicing safe computing is more important than ever. If you don't have a security program from Symantec, McAfee or Internet Security Systems, shame on you. They're cheap and effective. No computer should be without one.