@undefined. I presume you're an American / EU / Aus citizen? Otherwise, where did you legally obtain this stunning array of media
My thoughts on convergence (we're not there now, but not far away). Hopefully this isn't too OT...
Connectivity
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I'm backing mobile. Connectivity is the key. Saas means that OS, application and storage will increasingly happen via network in future (Blackberry, Mail for Exchange, google docs, box.net - I even see Pastel is going Saas). Bandwidth will be the currency of the future. Your device needs to be able to connect. Wherever you are. Phones support all major connectivity types. Including 3G which is all-pervasive (as opposed to wi-fi). I only see mobile connectivity increasing.
Storage
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Phones are up to 48GB storage now (N97). With increasing SD expansion, who knows where it's going? Remember 512 MB compact flash cards three years ago? Sis! Storage media should be large capacity, small form-factor and transferrable from one device to another (not only supported by Sony). Sure, SD isn't going to replace a 2TB hard drive, but do you really lug your entire music and HD video collection around everywhere you go? That said, next gen SD will support up to 2TB of data (standards are defined, hardware already being developed, follow link on wikipedia - SD). And if you can set up your home-based NAS device / PC as a server, what's going to stop you streaming / downloading files from it via phone with a client app and fast connection in future?
Playback / output
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Another post has already commented on iPhone playback via TV. The N97 screen allows for true widescreen playback when viewed on the device and allows for TV out. Lots of phones support TV out. Mobile displays aren't as nice as a larger PSP-style screen, but not as bad as you might think.
Digital content should not be stored on a variety of optical media. Why should I have read-only medium lying around, the sole purpose of which is to contain a single file? Resolution should not be tied to medium. Playback devices should support a variety of codecs into the future. Format should not be tied to hardware. Why should I buy expensive new technology just to support playback of a new format? Software should do the playback and I should be able to upgrade the software to do this, not my hardware. Big files should be transferred via USB / removable memory / wi-fi. Software can be easily upgraded / downloaded on phones to support new AV formats. Go mobile apps (Apple, Nokia, Android). Not so easy to install 3rd party players on a dedicated playback device.
Nobody's said anything about streaming media? Although it's still being tested locally, DVBH playback is natively supported on certain handsets already in the market. This can also be outputted to TV (works ok at PAL, decent audio, and can be recorded, with no cloud cover issues). That can replace my Dstv decoder. Another device gone, yay!
Status quo
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The downside with mobile right now is high resolution graphics, 3d rendering and 5.1 sound. Separation of playback from telephony also needs to be resolved. Maps are clumsy on smaller screens. Screen size for video playback isn't great, but not as bad as you think on larger phones. Bluetooth audio and FM transmission in cars is a plus. Dedicated hardware may have an edge in certain areas at the moment, but if you think about mobile connectivity, processor, media playback and storage capability 5 years ago, market adoption and demand suggests convergence is going the phone route. And a great phone is certainly going to be a heck of a lot cheaper than all those devices sold separately.
For now, I want a PS3. My phone can do all the rest on the road.