Craig Newmark epitomizes the kind of person electronics industry marketers lovingly refer to as an "early adopter." His modest apartment in the friendly San Francisco neighborhood of Cole Valley is decked with many of the gadgets that the industry is hoping most other people will think of buying in a few years' time. In his living room, there's a widescreen TV surrounded by a half-dozen silver audio and video devices, the most important of which are his two ReplayTV units. One is an older model he purchased a few years ago, when he first heard of PVRs; the second is a ReplayTV 4000, whose broadband connection and automatic commercial skip caused 28 media companies, including Viacom, Disney, AOL Time Warner and their subsidiaries, to file suit against Sonicblue last October. They charged Sonicblue with engaging in an "unlawful plan ... to arm their customers with -- and continuously assist them in using -- unprecedented new tools for violating plaintiffs copyright interests."

But Newmark didn't buy the ReplayTV as part of a grand scheme to engage in unlawful conduct. He bought his first PVR because he liked the concept, he says, and when he tried it, he was instantly hooked. It's a feeling that many PVR owners report; you don't realize how under the thumb of network executives your life has been until you've been freed by a PVR, until you no longer need to live by a prepackaged schedule stuffed with stupid ads. "Now," says Newmark, "I don't watch more TV, but I can watch more of what I want more of the time." Perhaps that feeling of liberation explains why it's not uncommon to hear people say their PVR "changed their lives," or to hear that TiVo has a Mac-like, cultish fan base. And it's not hard to believe analysts, such as Ryan Jones of the Yankee Group, who predict that by 2007 there will be 19 million PVRs in use around the world.

Microsoft first got into the PVR business with UltimateTV, which is a stand-alone recorder bundled with some satellite TV receivers. But "consumers are increasingly using their PCs for the very purpose of digital media," says Murari Narayan, the director of marketing for Microsoft's Windows eHome division, the group that developed XP Media Center. "People are spending more time on their PCs than on any device in the home other than possibly the phone. And when you think of how much time they're spending on it, you say, 'Wouldn't it be nice for them to also watch TV on this?'"

It is nice. In November, Microsoft sent me a review model of a Media Center PC. When I got the machine, I unplugged my TiVo and set up Media Center in its place; in the couple of weeks during which I tried it out, the Windows system worked rather well. The PVR lacks some of the features TiVo has -- it does not, for example, suggest shows it thinks you'll like -- but its interface is every bit as intuitive as other systems'. Microsoft doesn't charge a monthly service fee for channel guide data, as the stand-alone PVR companies do, but Media Center PCs, at between $1,000 and $3,000, depending on the model, are pricier overall.

The system does have one great advantage over stand-alone devices, however: It's endlessly expandable. It's possible to add space to TiVo, but the practice is complicated and not officially sanctioned. On the Media Center PC, "you start throwing a bunch of TV content on there, the hard disk will be full in no time, and you can easily add another external hard drive," Narayan says. "That is where the flexibility of the PC is an asset for consumers when they do digital media."

There are other reasons to like the flexibility of a PC. The first thing you notice when you start using the system is that all of your TV files are conveniently stored in a folder on your hard drive. It's easy to share them -- burn them on to a DVD, say, or transfer them to another machine on your home, office or dorm network. It's also possible to share files with people you don't know, which is something you can't do with a ReplayTV: If you have a peer-to-peer file-sharing program installed on your Media Center, all you have to do is give the program access to your TV folder, and suddenly anyone using Kazaa or Gnutella has access to your entire week's take of "Friends."

Microsoft calculated, early in its development of XP Media Center, that the flexibility of a PC-based PVR, while good for consumers, would have put the company at odds with media firms. That's why its initial plans for Media Center called for a very stringent TV-content protection system. "Any piece of TV content that came into the hard disk, we said that you could not play it back anywhere else," says Narayan of the original plans. "You recorded a TV show and we protected it on the hard disk. You could burn a DVD [of the show], but only for playback on that PC."

But when Microsoft released its plans for TV copy protection in September, the idea was roundly skewered. Industry observers made the obvious point that young people, who represented a natural market for computers that were good at doing music and movies, weren't going to like having their computers tell them what they could and couldn't do with programs they recorded. At the time, Microsoft defended its system, telling the tech media that it wanted to "balance" the relationships between "the consumer who wants the content and Hollywood, so they feel comfortable with that process and don't clamp down and make that impossible." But the company took the consumer and analyst feedback to heart, Narayan says, and decided to "accelerate" plans to allow media companies to decide which content they want to protect, taking the immediate burden off Microsoft.

Specifically, Microsoft now "respects" a protection scheme called CGMS-A, which is essentially a code that can be inserted into a television broadcast -- much like closed captioning is now embedded -- that explains how that content can be used. If copy protection is turned on in a TV show, the Windows PVR would play back the show only on the computer on which it was recorded. Otherwise, the show could be transferred to any other device.

But here's the rub: "We haven't seen any content that's actually protected," Narayan says. "There may be some instances where people protected maybe a particular pay-per-view show, but we haven't seen it -- though I would hardly say we've done any exhaustive research or testing." The upshot for Microsoft, in choosing the CGMS-A, then, is that it gets to say Windows protects content without actually protecting much content.

Will media companies start protecting their content using CGMS-A? That's hard to say. (All of the companies suing Sonicblue over its PVR features, as well as their lawyers and the Motion Picture Association of America, an industry trade group, either declined to comment or did not respond to inquires regarding PVRs.) At some point, they probably will have a protection system embedded into TV shows, industry experts say; the companies have, after all, leaned on the FCC to mandate that a "broadcast flag" similar to CGMS-A be mandated for digital television. (In August, the commission voted to explore ways of requiring digital TVs to respect such a flag.) But in the short term, at least, there'll be nothing in any episode of "The Sopranos" telling your computer not to distribute the show -- leading, one might guess, to a lucrative cottage industry in the sale of homemade DVD archives of the show.

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