The home entertainment world is changing. Got a camera? Chances are that it's a digital one. Listen to music on the way to work? Then you've probably dumped your old personal stereo and bought an MP3 player instead.

Take a look around: hang-on-the-wall LCD TVs are replacing old CRT sets, RSS is usurping idle bookmark web browsing and 8MB broadband is superseding old 56K dial-up accounts. Come the end of 2012, digital TV broadcasts will also have killed off the analog signals we've used in the UK since 1936. We're increasingly living a digital lifestyle.

The PC as an entertainment server
As we start to own more digital devices, we're starting to look for new ways to control, share and view our digital data. This is where the PC comes in. From its humble origins as a word processor and DOS-cranked abacus, it's mutated into a versatile entertainment appliance that can store, manage and distribute our music, movies and photos. It's the holy grail of the digital home concept. None of the big hitters in the consumer electronics space - the Panasonics, Samsungs, Toshibas and others - have anything that can match it.

Just look at how far the PC has come in the last few years. Evesham's stylish ebox (£899) crams the guts of a traditional desktop into a silvered chassis that's got more in common with a DVD player than a hulking ATX tower. Even better, the Elonex Lumina (£2,250) shoehorns a full-fat 3GHz PC into the back-end of a 32in LCD telly. If that's not what you call progress, then consider Sony's trade show oddity, the VAIO Type X. This monolith-black PC server has room for seven, count 'em, seven separate TV tuners and features a 3.6GHz P4 processor and a cavernous terabyte of storage (that's four 250GB hard drives in a RAID 0 configuration). We probably won't see it outside of Japan, but it's a taste of customised AV PCs to come .

That's not to say the PC is without its problems. PCs have never been easy to use or to maintain and, by aiming a PC at the home, manufacturers are targeting people who still have trouble setting their VCRs. PCs like the ebox might look the business, but they're still too complicated to sit under the TV. They're hardly whisper-quiet either, despite the arrival of fan-less Pentium M systems, and there's also the sobering fact that a PC is three times as expensive as a DVD recorder. Aiming the PC at the living room is the easy bit; getting people to put one there is a far bigger challenge.

From media centre to media server
Three years ago, the idea of a 'digital home' didn't stretch far beyond having a computer in one room and your TV in another. The two could be connected, but only five star geeks knew how. Today's media PCs have the potential to bring the two rooms together, enabling you to record TV, browse digital photos and listen to your digital music collection. In the 2005 edition of the Windows XP Media Center software, you can burn recorded video to DVD and have MSN Messenger running in the background while you couch potato through last night's Top Gear. It's easy to become a fan.

The PC is ideally suited to act as an all-round entertainment system. Not only is it compatible with a wide range of file formats, its upgrade prospects more than make up for its fiddly nature. Unlike a consumer electronics device, which is out of date when a new technology appears, a PC multimedia set-up can be adapted to suit the digital landscape. Want to switch to Blu-ray? You'll be able to take out your existing drive and slot in a new one. Try doing that with a modern DVD player.

But we just don't see the PC in the living room. Instead, we envision it as a hideaway media server, tucked away somewhere so the whirring of its fans isn't a constant distraction. Plugged into a TV source, this PC can quietly record TV and host music and photos, updating its content automatically over a broadband Internet connection. Hook it up to a home network and it can then make the content accessible to other devices, so you can listen to audio wherever you want, or watch a recorded program on any TV or monitor that has a compatible set-top box. This is the invisible future of the PC.

The guts of a good system
You probably won't be so enamoured by a £899 media centre that you'll rush right out and buy one, especially if you already own a PC. Besides, refitting your existing desktop or laptop with multimedia-friendly components is a straightforward process.

As far as hardware is concerned, even a relatively lowly processor can handle the multimedia duties required by a media PC. At the very least, you'll need to have an Intel or AMD chip that hits a speed of 1.4GHz and above, preferably 'above'. Pentium 4 chips are perfect as media workhorses, although their blatant disregard for power management means that a media PC powered by one will rarely be quiet. Ditto anything built around a high-end AMD Athlon or Athlon 64. Noise won't be a problem, though, if you choose to follow the 'Media Server' path.

Only a Pentium M-based PC, or a Centrino laptop, will be quiet enough to sit unnoticed in the living room. Transforming a laptop into a multimedia hub is certainly possible - you can use an external TV tuner solution, like AverMedia's DVB-T USB 2.0 (£69, cclonline.com ) and either add an external high-capacity HDD or rely on a NAS to store your data. A Maxtor 300GB OneTouch II USB 2.0/FireWire External HDD (£170, dabs ) or the Buffalo LinkStation 160GB (£165, dabs ) will do nicely.

Failing that, you can rip out your PC's motherboard and replace it with a Pentium M board - AOpen's i855GMm-HFS (£150, dabs.com ) is easily the best choice, featuring high-resolution DVI and component video outputs (ideal for HDTV), plus two PCI slots for TV tuner cards. A Pentium M chip to slot into this motherboard will cost you anywhere between £140 and £450, depending on the clock speed. Try ebuyer or dabs for the best deals.

Next: more storage. If you're upgrading an old PC, adding a new hard disk is easy and a 200GB drive will only blow a £70 hole in your wallet. The only thing that you need to check is whether your motherboard supports the older IDE/ATA standard or the new SATA specification. Crucially, buy as much storage space as possible. An album ripped to MP3 will require only 50 to 60MB of space, but a half-hour show recorded in MPEG-2 will swallow between 750MB and 1GB. As a general rule, halve the capacity of a hard drive to calculate the number of hours of TV that can be recorded on it in a good quality mode. A 200GB HDD, for example, should be able to store 100 hours of MPEG-2 video.

As for the rest of your PC's specification, this should include at least 512MB of RAM, a 16-bit soundcard with 5.1 surround support and a DVD/RW drive for burning recorded content to DVD or CD. You'll also need a TV tuner (FM radio is optional - get a separate DAB system or a Sonos multiroom system instead). But the card you choose will ultimately be determined by the software you use for a front-end and the type of video source you plug into it.

Tuning in, switching on
Mutating your PC into a media system isn't as simple as buying the cheapest TV tuner you can find. Do you go for analogue or digital? A single tuner, two separate tuners (for multi-channel recording) or one handy dual-tuner card? And will it work with the software shell that you've chosen? (See the Media Center alternatives boxout)

Considering that the UK is edging towards an all-digital TV future (the analog transmissions will be switched off in 2012), you might think that a digital tuner is the way to go. Not necessarily. Analog tuners still have a role to play, especially if you plan to plug a cable or satellite source like Sky into your media PC. An analog tuner should also be used if you plan to route a Freeview signal (from a set-top box) into your media PC. Dual-tuner cards, like the WinTV PVR 500 (£320, europc.co.uk ), are also available, enabling you to watch one channel while recording another.

There's little point in building a system with only one TV tuner. While digital tuners are preferable, giving you instant access to Freeview channels, no dual tuner options are currently available. There's nothing to stop you installing two separate digital TV tuner cards in a PC, but be sure to check the following: (1) the software you're using supports multiple tuners, (2) the driver architecture used by the card, either WDM or BDA, is compatible with the software you've chosen, and (3), the card features its own hardware MPEG-2 encoder.

Check out the following sites for compatible cards: AverMedia , Hauppauge and Black Gold . The best way to find a compatible card is to work backwards - pick the software you want to use and choose a card from the manufacturer's recommended list. If you already own a TV tuner, we would always recommend ShowShifter as the best alternative to Microsoft's Media Center Edition software, although Beyond TV gives it a good run for its money.

Are you being served?
If the PC is to carry off this new role as the media hub of the home, it'll need to rely on companion digital media adapters to pipe multimedia content to TVs and hi-fis. These are the boxes that bridge the IT and consumer electronics divide, connecting to a PC via wired or wireless 802.11g connection and providing TV-style access to the files stored on it. Pinnacle's new ShowCenter 200 (£170), or Sony's VGP-MR100 (£140) are prime examples. Strangely, this is the one area where Microsoft currently lags behind the competition. Its Media Center Extender products do provide this digital media adaptor functionality, but they are still unavailable to UK and European users. With the arrival of the Xbox 360 in November, there's a case for abandoning standalone Extenders completely. Microsoft's next-generation console has the same technology built in, and this $300 to $400 super-toy will also play games and act as a DVD player. It's the ultimate set-top box.

Finally, there's the portability of your content to consider. Photos can be easily transferred to other devices, but the process for music and video isn't as straightforward. Downloaded music is often restricted to a limited number of devices while DRM-protected tracks can't be streamed to digital media adaptors.

Video too, can't always be shunted directly to a portable player. There are resolution and file size issues to consider. Most recorded video will need to be re-encoded from its native MPEG-2 into compressed file formats such as DivX. ShowShifter has the capacity to re-encode its recordings automatically, but resolution still needs to be adjusted to fit the device the video is being ported to - 320x240 for old PDAs, 640x480 for newer handhelds, 480x272 for the PSP. The best DivX encoding software that we've found is PocketDivXEncoder. You can find more information about it here.