Today, the world is only beginning to see computer functions on TVs or TV functions on computers. Silicon Valley desperately wants to continue that convergence trend, and it sees the conversion from analogue to digital TV technology as the ideal accelerator. But TV makers and broadcasters aren't so sure. They tend to believe that digital TV's high resolution is the carrot that will lure consumers to spend money on new services and devices.

As recently as this summer, Intel Corp.'s chief executive, Andrew Grove, had described the future of home entertainment as a zero-sum game. On one side was the computer industry, desperately trying to figure out how to get consumers to both channel surf and Web surf on their computers. On the other side was the TV industry, just beginning to ponder ways to bring computer functions to the TV set, yet still dominate in the "War for Eyeballs."

But in a startling reversal, Intel executives claimed last week that portrayal was off-base. It was a war for a "nonexistent market," said Intel Senior Vice President Ron Whittier at a press gathering at its Santa Clara, Calif., headquarters. What he meant was that there are so few "converged" products on the market that there's virtually no market yet for hybrid PC-TV services.

As a result, Intel said, it would dramatically change its approach to the rapidly emerging, federally mandated digital-TV market. Specifically, Intel said it would abandon its frustrating effort to convince the TV world to commit exclusively to broadcasting in computer-friendly "progressive-scan" formats. Instead, as the broadcast industry begins its long and costly conversion from analogue to digital television technology, Intel said it would create devices (mostly set-top boxes) capable of handling all formats, including the computer-unfriendly "interlaced" ones.

The position change stunned Intel's "partners" in the digital TV standards debate. Only last April, Intel had stood alongside Compaq and Microsoft in staunch support of exclusively progressive-scan signals. But the chipmaker's reversal had placed its partners in an awkward position.

Compaq maintained that the so-called DTV Team and its goals were still intact. Microsoft simply didn't comment at all.

(Microsoft is a partner with NBC in MSNBC.)

At issue is the ability of the computer industry to make computer functionality a standard feature in future TVs.

Today, the world is only beginning to see computer functions on TVs (WebTV, for example, or the electronic programming guides offered by satellite services) or TV functions on computers (such as Intel's Intercast technology, which displays live TV programming alongside Internet content).

Silicon Valley desperately wants to continue that convergence trend, and it sees the conversion from analogue to digital TV technology as the ideal accelerator.

The high-tech sector envisions all TVs offering e-mail, Web browsing, electronic programming guides, video games and more.

But TV makers and broadcasters aren't so sure. They tend to believe that digital TV's high resolution -- rather than some vague notion of interactivity -- is the carrot that will lure consumers to spend money on new services and devices.

That's where the importance of the standards comes in.

Words just don't look too good on "interlaced" TV displays. Simply put, Silicon Valley needs all the help it can get to convince consumers and broadcasters to consume and create interactive TV products. And only through progressive-scan imaging will their interactive services look their best.

MORE FORMATS, HIGHER COST

Now, a Microsoft spokesman downplays the Intel split. It's simply a matter, he says, of determining the most cost-effective and expeditious way to create interactive television. Allowing all formats to be broadcast in the coming digital-TV age will make digital receivers more expensive. That's because the "decoders" that translate the many formats into TV images are expensive to make; the more decoding required, the more expensive the equipment.

Intel estimates that all-format decoders will cost between $200 and $250 next year (and less thereafter). But that $200-plus only pays for part of any piece of home electronics. The TV screen itself, the disk storage on a set-top box, the processor -- all those components add hundreds more dollars, potentially taking interactive-TV devices beyond the reach of the typical couch potato.

So why did Intel break ranks?

Possible answer: Because as a maker of processors, Intel simply wants to make sure living rooms are filled with the maximum number of interactive devices. The chipmaker doesn't care how robust those services are, so long as they involve some sort of computing. So the company is buddying up to broadcasters, consumer-electronics makers and everyone else in the TV industry as best it can.

Why don't Microsoft and Compaq follow suit?

Possible answer: Because of the crucial added-cost issue mentioned above.

But for Microsoft, there may be another reason as well, suggests Dan Lavin, analyst with Dataquest. The software giant has spent two decades maximizing its operating system for a progressive scan format. As the company readies its latest-model operating system, Windows 98, featuring TV-tuning capabilities, shifting gears may not be easy.

What's more, the company's chief product, its operating system, is extremely dense; like a deluxe VCR, it contains myriad functions and options for users, many of which most users will never touch. Thus, Microsoft wants to make sure that as much computing power as possible is available on people's home-entertainment displays.

To be sure, conversion technology enabling devices to toggle back and forth between the two incompatible formats may well mitigate any problems for Microsoft. And as many analysts point out, Microsoft is plenty resilient in the face of setbacks. As for Intel's shift, some suggest it's simply a ploy for the company to cozy up to TV types and then convert them to its preferred approaches -- i.e., the progressive-scan formats it appears to be abandoning.

Despite Intel's change of direction, Microsoft continues its staunch support of the progressive-scan format. "We think with digital, it's a no brainer," says Phil Missimore, a Microsoft spokesman. "The discussion keeps moving forward in bits and starts."

But Josh Bernoff, Forrester Research analyst, isn't so sure.

"About four or five months ago, Microsoft people told me they were making pretty good progress in convincing broadcasters to adopt their standards," he says. "I haven't heard much of anything since."

What Intel just did, he believes, is "pointed out that the emperor has no clothes on."