Another sign that PC is losing its relevance:

Sunday November 4, 3:23 pm ET
By Hiroko Tabuchi, Associated Press Writer
TOKYO (AP) -- Masaya Igarashi wants $200 headphones for his new iPod Touch, and he's torn between Nintendo Co.'s Wii and Sony's PlayStation 3 game consoles. When he has saved up again, he plans to splurge on a digital camera or flat-screen TV.

There's one conspicuous omission from the college student's shopping list: a new computer.

The PC's role in Japanese homes is diminishing, as its once-awesome monopoly on processing power is encroached by gadgets such as smart phones that act like pocket-size computers, advanced Internet-connected game consoles, and digital video recorders with terabytes of memory.

"A new PC just isn't high on my priority list right now," said Igarashi, who was shopping at a Bic Camera electronics shop in central Tokyo and said his three-year-old desktop was "good for now."

Smart phones and gaming machines seem to be the next area of growth. The only constraint remaining is service providers desire to restrict access to third party software. Nevertheless, I think in 2008 we'll see major shifts in the industry.