Sales of CD-ROM disks to consumers will continue to accelerate, according to industry experts at the annual CD-ROM Expo, but they caution that CD-ROMs may never be more than a niche market — albeit a profitable one.

Craig Mundie, vice president of advanced consumer technology for Microsoft, which just began its own “Home” CD-ROM consumer line, sees CD-ROMs as a medium that will serve as a transition to a “full two-way broadband switched network”– the electronic superhighway.

Mundie predicted the network will be operating by the end of 1995, with as many as 20 million households connected by 1998.

Laurie Stone, a former Apple Computer exec who recently was named vice prez/managing editor of Time Life Digital in Alexandria, Va., was more sanguine.

Sid Bhatt, president of MDS Distributors, aSanta Fe Springs, Calif., CD-ROM distributor said his unit sales volume has increased 300% in the past year.

But the market remains extremely fragmented, said Bhatt and another distributor, Alan Wolfe, director of marketing for Winter Garden, Fla.-based Max Media Distributing.

“It’s a niche market and is becoming even more of a niche market,” said Bhatt.”The problem is that there are so many different titles out there that major chains don’t have (enough) space.”

Although Microsoft’s Mundie was addressing a CD-ROM conference, and despite the fact that his company is pouring millions into a new CD-ROM unit, he concentrated almost entirely on interactive digital networks as Microsoft’s focus for the digital future.

Such networks will be ready “more quickly than people think,” Mundie said in a keynote speech, because two key applications, movies-on-demand and home shopping, already generate $ 12 billion (video rentals) and $ 50 billion (catalog sales) worth of business “that could fund the whole thing right now.”

CD-ROMs will be valuable to “learn how to master interactive techniques,” Mundie said.

But once networks are in place, he predicted, CD-ROM sales “will probably dip significantly. The cost of distribution is so cheap on a broadband network that shipping bits will be cheaper than pressing a CD.”

Follow @Variety on Twitter for breaking news, reviews and more