Digital technology is squarely poised to steal the march on other innovations over the next few years.

And leading the way will be Digital Signal Processing (DSP), an industry that has been compared, in terms of development potential, to that of the computer giant Intel 10 years ago.

According to Mr Robert Frerichs, global managing partner of electronics and high-tech practice at Andersen Consulting, DSP is the emerging technology with the greatest potential for mass revenues.

DSPs are devices that digitise analog signals, and can be found in consumer products, home appliances, and personal computers. They are increasingly being used to process audio, video, temperature and pressure signals because the results are superior to general purpose processors, like the Intel Pentium chip.

Over time DSP manufacturers have managed to pack more instructions on a chip, increasing the speed of the devices they run. Texas Instruments, which is currently the market leader netting more than $1.2 billion (£800 million) last year, recently managed an impressive 1.6 billion instructions per second.

This level of dedicated processing power means demand for DSPs is growing rapidly. Lucent Technologies, Motorola and Toshiba are expected to compete furiously with Texas for market share.

Mr Frerichs was in Ireland to talk to some of Andersen's key clients with operations here. The list reads like a who's who of leading international players in the technology industry, including Sun Microsystems, Microsoft, Intel, Motorola, Hewlett-Packard, Ericsson and Compaq.

While these companies are household names today, Mr Frerichs points out that they only came into existence in the early to mid1980s. "When we first started working for Microsoft, Bill Gates used to visit our offices."

Within 10 years, many of them had risen through the ranks of the top 150 electronic system companies, displacing the majority of firms who eventually dropped off the list. This trend characterised the high-tech industry, and has led to a complete shift in the timescale for forecasting within the industry. Today, most companies operate on an 18- to 24month cycle instead of the traditional five-year cycle.

"I heard someone say recently that maybe Moore's Law was more a stretch goal than a prediction, and I'm inclined to agree. The challenge was thrown down and the industry has constantly beaten it." Moore's Law predicted that computer processing speeds would double every 18 months. The Internet, which is driven by the exponential growth in computing power, has doubled traffic across its backbone every three months for the last three years.

Looking ahead, Mr Frerichs sees the future technology landscape mapped out in the convergence of telecommunications and high-tech electronic companies working to make it possible. What does he make of Ireland's potential role in this new order?

"Ireland is right on the money. The IDA has a good feel for the way things are going. In terms of shared services, electronic commerce and the Web they are doing it exactly right."

He is also confident of new software centres opening up here. Many US-based companies are running out of skills and moving into other locations to expand their growth.

"The technology will have to be invented soon that will help software development. In the meantime though hundreds of engineers will be required to write software."

Andersen in Ireland is also beginning to notice a trend where indigenous software companies buy infant technology firms instead of trying to develop the expertise themselves. The most successful global example of this has been Cisco.

"At worst the company is buying good employees, and at best it's getting good technology."

As the industry matures more and more technology start-ups are set to emerge as employees gain knowledge and spin off their own companies. Mr Frerichs believes the Irish are well positioned to seize this opportunity with a rich base of innovative technology companies already located here. "People have traditionally feared going out on their own. Now investors see a lot of young graduates are happy to adopt different economic models and be more self reliant."

Despite the recent woes of the semiconductor industry, struggling to deal with a glut and the Asian crisis, Mr Frerichs is confident it will remain buoyant with some interesting developments ahead. He predicts Intel will sustain itself by servicing the higher end of the market with more sophisticated technologies. However, he believes the delay in the launch of the new Merced chip has opened the door slightly for Compaq with its newly acquired Alpha chip. "I think we will see more and more of what Compaq is going to do with Alpha. This was the more under-appreciated asset that came with the acquisition of Digital."

Mr Frerichs also notes with interest the recent alliance of Netscape, America Online and Sun Microsystems: "As Bill Gates has always said, competition comes from below, not above." He now thinks they will prove a major challenge to Microsoft, particularly with Sun's Java gaining gradual acceptance as an industry standard.

In the battle of the PCs, Mr Frerichs believes 1999 is the year that will see Compaq giving Dell a run for its money. With its newly-acquired service capability - after the Digital acquisition - Compaq can offer strong support right up to the highest level. With profit margins now so low on PCs, the biggest opportunity for returns lies in services and support in the higher end of the market. At the moment, a customer call to a help desk can erase the producer's margin for the original sale of the PC.

This is why the notion of leasing from PC makers is beginning to gain credence. Under an agreed arrangement, the supplier will take care of all the equipment, upgrades and service issues. Instead of a capital outlay, the customer will pay a fixed sum over time for a certain level of service.

With most of Europe's telecommunications industry facing liberalisation, Mr Frerichs anticipates huge benefits for the consumer. The first will be a massive increase in Web use, particularly for the conduct of business. Very simple elements of the new technology can wipe out traditionally high costs overnight - inventory tracking and email being examples.

With 23 per cent of all US green-field investments into Europe going to Ireland, he is confident Ireland will be at the centre of the electronic commerce revolution.

"Ireland should get recognition for its government having its act so together. It knows where it should move the social system and business for the future - and that's a very unique thing. It will serve them well."