THE NEXT GREAT GADGET

By MICHAEL KRANTZ

The known universe, as you might have heard, is going digital. LPs gave way to CDs. Direct satellite is eroding cable. But the TV you watch and the movies you rent are still grainy old analog formats crying out for replacement.

Those cries have finally been heard. Last week's Consumer Electronics Show in Las Vegas marked the long-awaited public debut of the digital video disc, the (putative) New Tech Gadget of all New Tech Gadgets.

DVD comes with a steamy sales pitch. Imagine a 5-in. CD that holds 20 times more data than a CD-ROM and offers the richest sound you've ever heard and the lushest images you've ever seen. Throw in digital TV, the standards for which were approved by the feds last month, and the result just might be the culmination of the consumer electronics industry's long search for a grand unified theory of home entertainment: one hardy, gleaming box that plays music better than your stereo, video better than your vcr, and software better than your PC. "DVD," says John Briesch, president of the Sony A/V products group, "is a 'wow' product."

That, however, doesn't guarantee it will rake in 'wow' revenues in this millennium. The flurry of product announcements at CES does indicate that after years of broken promises, DVD is ready to roll. "The good news," says Briesch, "is that we're starting a business in 1997." The bad news is that the emphasis is on starting. The term DVD encompasses various products, many of which won't have reached your local Radio Shack by the time you start planning your Year 2000 party.

The meat-and-potatoes product is DVD video, which is meant to send vhs and laser disc the way of all eight-track. Two dozen models of DVD players should reach the market this year at prices ranging from less than $500 to more than $1,000. All offer DVD's stunning sound and vision, along with the various bells and whistles that digital storage's interactive ease and sheer data acreage allow, including PG- and R-rated versions of a given movie on one disc, multiple languages, no rewinding, movie-and-game pairings, instant searches and every custom setup and picture adjustment that early adopting cinephiles could possibly get all hot and bothered over.

The big question is, How quickly will Hollywood release movie titles for this costly and unproved platform? About 100 DVD titles--including, ominously, zero from home-video-titan Disney--should come out this year (a few highlights: Raging Bull, Twister, Legends of the Fall and Tony Bennett's mtv Unplugged), which is a lot fewer than this new medium needs in the long run but more support than the infant CD industry got in its rookie year, 1983, when Sony moved a mere 35,000 players. "We think DVD will ramp up more quickly," says Briesch, who predicts 10 million players sold by decade's end.

In fact, DVD 's most enthusiastic pump primer could turn out to be the PC industry. Home video, after all, is already a multibillion-dollar cash cow, which could lessen Hollywood's urgency to embrace the standard meant to replace it. PC makers, by contrast, are desperately seeking a beachhead in the American living room, notes Alex Balkanski, ceo of digital-video pioneer C-Cube Microsystems, "and they're convinced they need DVD in that configuration." So they're willing to bet that if they build it, consumers will come. By midyear many PCs will come configured for DVD-roms, which are basically CD-ROMs with more data capacity and faster action. PCs will also soon be able to play DVD video titles.

Therein lies digital video's trippiest promise: the Convergence of All Media. The next two years should bring two critical second-generation DVD products: DVD audio, a sound standard far surpassing today's CD quality; and recordable DVDs, which will let you do everything from record music and TV shows to download Web data to edit your own videos. And eventually DVD players themselves could morph into futuristic set-top boxes that would let you listen to music, play games, watch TV and movies, and surf the Web, all on one grand digital screen. "This is the realization of multimedia," says Craig Eggers, director of marketing for Toshiba: "the integration of full-motion video into a computer environment."

That's the theory, anyway. The ongoing digital tsunami is nothing if not unpredictable, and the players will have to get a lot cheaper for DVD to win mass acceptance. But the integration of digital media into one all-purpose player is (probably) too logical not to triumph in the long run.

And what of all the money you've spent on CDs and CD-ROMs that, mere years after they rendered older media obsolete, now face the dustbin of history themselves? Don't panic: hardware manufacturers will make their machines "backward compatible" to ease your enlistment into the DVD revolution. Your old CD-ROMs will work fine in DVD-rom drives, and although the music industry is still hashing out DVD-audio standards, you surely won't have to junk all those Jethro Tull CDs you bought to replace the scratchy vinyl copies of Aqualung and Thick As a Brick now clogging your closet.

That multitape vhs Beatles anthology, however, is history in more ways than one. If you still haven't figured out how to program your vcr, you might not want to bother learning now.

--With reporting by Lisa Granatstein/New York

With reporting by LISA GRANATSTEIN/NEW YORK