PARTNERS TO MARKET COMBINATION TELEVISION, PC : COMPAQ-THOMSON.

Byline: David E. Kalish Associated Press 

Most people don't associate living rooms with floppy disks and hard drives. But that hasn't stopped leading makers of computers and TVs from merging the pastimes in new machines for couch potatoes.

Compaq Computer Corp. and Thomson Consumer Electronics Co. unveiled a combination ``PC Theatre'' on Monday that looks like a large-screen TV with a big difference.

In addition to a 36-inch monitor with Thomson's RCA brand, it includes a separate Compaq box that doubles as a computer, enabling people to browse the Internet, play video games and send electronic mail.

At $5,000, the product is not for everyone. But with the cost comparable to other ``home theater'' systems featuring big screens and big sounds, Compaq hopes to get its brand out in front of the next wave of all-in-one digital technology.

By 2006, consumers will have to replace or convert their existing analog TV sets to receive signals from broadcasters sending cinema-quality digital television. Since digital TVs can operate as computers, PC makers see the shift as an opportunity to spread their wares into the living room.

Compaq and RCA ``are setting the stage, creating some brand identification for themselves, making a statement. They are testing the waters,'' said Richard Zwetchkenbaum, an industry analyst with International Data Corp.

And they are not alone.

International Business Machines Corp. is working on its own version. Instead of full-fledged computers in each room, IBM is developing a home system built around a central computer that feeds TV, Internet access and computer functions to monitors scattered throughout a house. IBM expects to announce a product by the end of the year, people close to the Armonk, N.Y., company said. IBM officials declined to comment.

Princeton Graphic Systems, based in Santa Ana, slowly is rolling out its Arcadia home monitor, starting at $800, which plugs directly into an existing PC for both computer and TV viewing.

Japan's Mitsubishi Electric  Corp. is working on a television that builds in a device that allows people to choose between watching TV or cruising the Internet.

The Compaq-Thomson product initially will be sold in six areas - Dallas-Fort Worth, Denver, Houston, San Francisco, Seattle and Washington, D.C. Plans are to go national in the fall.

CAPTION(S):

Box

Box: Compaq-Thomson (See text