Things are looking up for the PC industry. Research company IDC has just raised its forecast for worldwide PC shipments to a record high of 152.6m units in 2003, and 169.9m in 2004. In this year's first quarter, IDC had revised its projection downwards from 8.3% to 6.9%: now it is predicting 11.4% growth.

PCs have certainly become more attractive over the past couple of years. For example, on the high street, you can now get a 2.4GHz desktop PC complete with printer and scanner for £399.99 including VAT, or a notebook PC for £599.99. It is certainly worth paying more to get a better specification, but you don't have to pay much more.

For businesses, a new PC now costs less than £1 per working day, so it only has to save its user 10 minutes a day to pay for itself. Or save the company £1 a day in support costs, which it almost certainly will, if you are replacing PCs running DOS-based versions of Windows with the much more reliable Windows 2000 or XP.

Of course, the PC industry is also expanding beyond its traditional base in desktops and notebooks. PC chips (from Intel and AMD) and PC operating systems (from Microsoft and various Linux companies) are rapidly taking over the server business, and have at least a foothold in games consoles. Microsoft's Xbox runs a version of Windows XP on an Intel x86- compatible processor, and the company is also producing software for cars, smart watches and other devices.

There is now a wide range of products that are basically customised PCs. These include ATMs, supermarket tills, slot machines (one-armed bandits), and some television set-top boxes, for example, the TiVo.

Computer companies such as Apple, Dell, Gateway and Hewlett-Packard have already started selling consumer electronics products. These include flat-screen television sets, digital cameras, electronic organisers and portable music players. Smart phones look most likely to be the next addition, because most smart phones are already based on operating systems developed by the computer industry: Psion/Symbian, Palm OS, Microsoft Windows CE or Linux. Intel is also aiming for this market with its XScale version of the UK-developed ARM processor.

There are lots of reasons for this expansion. PC manufacturers have the problem that, as prices fall, they have to shift more units every year just to stand still. They are also struggling to maintain profitability in a market where the biggest manufacturer, Dell, is setting fearsome challenges in manufacturing efficiencies. They desperately need new markets that will enable them to increase their turnover and make better profit margins, and the consumer electronics markets do both.

And now is the time to strike. People are used to the idea of connecting their gadgets and gizmos - cameras, printers, scanners, PDAs, music players, mobile phones, etc - to a PC, not to a TV set. For all their bluster, consumer electronics companies never delivered equivalent capabilities. It is not too late, but it may well prove an expensive mistake.