Masaya Igarashi wants ¥20,000 headphones for his new iPod Touch, and he's torn between Nintendo Co.'s Wii and Sony's PlayStation 3 game consoles. When he has saved up again, he plans to splurge on a digital camera or flat-screen TV.

There's one conspicuous omission from the college student's shopping list: a new computer.

The PC's role in Japanese homes is diminishing, as its once-awesome monopoly on processing power gives ground to gadgets such as smart phones that act like pocket-size computers, advanced Internet-connected game consoles or digital video recorders with terabytes of memory.