(FORTUNE Magazine) – Let's face it. The way your job is expanding into nights and weekends, you'll either have to equip a top-flight office in your home or start stashing a toothbrush and pajamas in your desk. And the very thought of assembling such a home office--devoting an entire room to a half-dozen expensive, hard-to-learn machines that are slower than and not quite compatible with those in your real office--probably has you reaching for the floss.

Well, put it back. The folks who make home-office gear have gotten real. Instead of pushing a vision of the future filled with pricey but less-than-crucial gadgets like videophones, they're making the stuff you need cheaper, smaller, and better. (If you're starting your home-office project with an extensive search for a videophone, it's time for you to get real; see box.)

Why now? Thank a happy alignment of technology and economics. Says Ray Boggs, head of home-office research at IDC/Link in New York, major manufacturers that used to ignore this market finally started developing products when they realized how much money was at stake. Some 35 million American households have installed a home office, even with the comparatively bulky and expensive old equipment. That number is now growing by three million a year. Boggs figures each new home worker spends $3,000 to $5,000 outfitting his or her office initially, and about $1,000 on upgrades and supplies every year thereafter. To get in on that action, manufacturers decided it's easier, really, to change technology than people. What do people want in a home office? Simple. They want one that's...

--Cheap. "Speaking from experience, yeah, I'm a cheapskate," says Andrew Johnson, who analyzes the peripherals industry for Dataquest of San Jose from his home office in the New York suburbs. Market research shows that home-office buyers tend to be more cost-conscious than business buyers--even when their employer is paying. Thus, from Johnson's point of view, "there's a big difference between $450 and $500 on a sticker at Staples."

Across the board, high-tech prices have dropped by half since 1988, according to the Bureau of Labor Statistics. Stubborn price shopping by tightwads--oops, thrifty buyers--like Johnson has prompted manufacturers to slash prices of home-office products even faster. Jim Langley, head of the Hewlett-Packard unit that sells home-office products, predicts his division will halve prices again within four years.

--Uncluttered. No matter how many square feet are allotted to the home office, it always feels cramped. "My office looks like a small Circuit City," complains Ken Frankel, who left Oracle to help launch Thinq Technologies and works from his spacious Mill Valley, Cal., home. "All that equipment takes up space."

Manufacturers' response: Let's get small. They're miniaturizing and combining functions like crazy. One of the biggest space eaters, cathode-ray-tube computer monitors, can now be replaced by svelte flat-panel displays--"the hottest products in the desktop monitor industry," according to Frost & Sullivan, a Mountain View, Cal., research firm. Sales of large flat-panel displays are growing 40% a year, and prices should drop by more than half, to about $1,340 apiece, in three years, Frost & Sullivan predicts.

Other office-product makers are packing more functions into each machine. All-in-one printer/fax machine/scanner/copiers (some serve as phones and answering machines too) are now the fastest-growing part of the peripherals market and are at the center of a price war involving Brother, Canon, HP, Sharp, and Xerox.

Not cool enough for you? Consider what's perhaps the trendiest miniaturized and combined product for home and office workers: Nokia's E-mail-handling, Web-surfing wireless telephone. Currently the only product of its kind (Motorola has announced development of a competing phone), the 9000 was introduced in Europe last year bearing a $3,000 price tag. Now it is going on sale in the U.S. for less than $1,000.

--Efficient. Speed is a perpetual requirement in home offices, says John Knowlton, editor of Business@Home magazine and a veteran home-office worker. Who wants to miss his kid's stage debut while downloading a file or printing a report?

Ever faster computers and printers are old news. Now there's a race to provide superfast telephone links--a race that isn't able to keep up with accelerating demand. Pac Bell, for example, has installed 132,000 ISDN lines (which can transmit data as fast as 128 kilobits per second) and expects to add another 30,000 lines this year. Telecommuter demands have sparked developers to equip apartment buildings across the country with T-1 lines, which are about 11 times faster than ISDN. Cable modems, which can be even faster than T-1s, are so popular that some towns--such as Canby, Ore.--are threading them to every home.

--And comfy. We're tired of serving our gadgets; we want gadgets that serve us and make our work nest homier. Just ask Sandy Pentland, who as academic director of MIT's Media Lab is one of the nation's top techies: "I want to live as a human. I don't want technology to tell me how to live." He refuses to bother with machines that aren't easy to run.

That means home-office workers are likely to gravitate toward products like Dragon Systems' speech recognition program, which lets your computer understand your spoken commands and take dictation. Out are products and services that make the home-office environment more formal, less comfortable--more like, you know, work. Consider, for example, those much-hyped videoconferencing phone and PC devices. Cynthia Froggat, a facilities consultant in New York, likes to work late at night. When clients call early in the morning, she jumps out of bed and answers the phone in her sleeping attire--which often means she's doing business naked. Who would want to give that up?

Home-office gurus--and not just the hardware makers--have gotten the message. "This technological revolution has just begun," pledges Bill Miller, head of research for Grand Rapids office furniture giant Steelcase, which is now aiming at the home market. "Everything is going to be 'smart,'" he predicts (in other words, equipped with microchips). He envisions "smart clothing" that "knows who you are and makes the proper adjustment when you sit in a smart chair. This is going to happen sooner than you think. We're not talking ten years."

If you listen to Mark Weiser, chief technologist at Xerox's Palo Alto Research Center, the future is buttons. Specifically, his home office is a testing ground for prototype wireless remote-control buttons--about an inch square and a half-inch deep--that can be mounted on any surface and programmed to handle almost any computing chore. Weiser rigged one so he could push it while drinking coffee in the kitchen and have his PC preload his E-mail. "Computers are currently annoying," he says. "We are going to create calm computing."

Sounds better than working at the office, doesn't it? Yet inevitably there's a downside. The easier it gets to work at home, the more you will, and that means more time near another important appliance: the refrigerator. "We are foragers," warns Gitte Jordan, a work anthropologist for Xerox, "and people will gain weight because they will forage in their refrigerators, which are packed with junk food." Herein lie the seeds of a backlash against comfort? Perhaps. Or maybe it means that the well-equipped home office of 2001 will also include a carrot stick snack dispenser.