Apple captured the portable music market with great design and functionality. It is driving up sales of its PC range with fast new Intel processors and its MAC OS is loved by millions. For them, taking on Microsoft is not going to be a hard task.

Apple's says its next big product will be in the home, with the launch of an entertainment solution that brings together the speed of Intel processors, an entertainment-only version of the MAC OS and, of course, the great styling and functionality that Apple has become famous for. Insiders say that Apple wants to deliver a new digital home solution by 2008.

But Apple doesn't want it to be PC-based. What Apple execs are trying to work out is how the device will handle both entertainment and automation applications. Digital media servers for home use are starting to emerge as a significant product category, with more than 50 million units expected to be sold in 2010, according to market research firm Parks Associates. A digital media server is defined as a networked device with a hard drive and software for distributing media to various locations throughout the home – and it's a market that Apple is determined to dominate, according to analysts.

The timing of when that will happen is uncertain, however I believe that Apple in the living room will be the story of 2008.

So what exactly would a digital home entertainment system look like? The key issue is interoperability: the movies or music broadcast via your satellite or cable connection must be easily and reliably captured and viewed on your TV, PC or portable media device.

Ditto any media that you create yourself, or which you purchase and download. Content should be easily transferred between media players, no matter what type, or where they happen to be in the house.

Ease of use is the primary issue. Consumers can't be bothered with worrying about interfaces and complicated cables and instructions. It has to be as easy to use and as reliable as a toaster.

I, for one, welcome Apple's contribution in this space. A number of major PC, consumer electronics and software vendors have already outlined their strategy for getting to this media nirvana, with many doing it around Microsoft. But this could change very quickly, in the same way that consumers dumped the Walkman for the iPod. They could easily dump Microsoft for Apple.

At this stage, Apple is definitely behind the pack when it comes to announcing its intentions. The company has yet to define a comprehensive vision for the digital home, and so Apple watchers are – once again - forced to read between the lines. But trust me, there are big things to come.