That's right — making diamonds. Real ones, all but indistinguishable from the stones formed by a billion or so years' worth of intense pressure, later to be sold at Tiffany's.

The company doing this is Apollo Diamond, a tiny outfit started by a former Bell Labs scientist. Peer inside Apollo's stainless steel-and-glass machines, and you can see single-crystal diamonds literally growing amid hot pink gases.

This year, Apollo expects to grow diamonds as big as 2 carats. By the end of 2005, it might expand to 10 carats. The diamonds will probably start moving into the jewelry market as early as next year — at perhaps one-third the price of a mined diamond.

The whole concept turns the fundamental idea of a diamond on its head. The ability to manufacture diamonds could change business, products and daily life as much as the arrival of the steel age in the 1850s or the invention of the transistor in the 1940s.

In technology, the diamond is a dream material. It can make computers run at speeds that would melt the innards of today's computers. Manufactured diamonds could help make lasers of extreme power. The material could allow a cellphone to fit into a watch and iPods to store 10,000 movies, not just 10,000 songs. Diamonds could mean frictionless medical replacement joints. Or coatings — perhaps for cars — that never scratch or wear out.

Scientists have known about the possibilities for years. But they've been held back because mined diamonds are too expensive and too rare. And they're hard to form into wafers and shapes that would be most useful in products.

Manufacturing changes that. It's like the difference between having to wait for lightning to start a fire vs. knowing how to start it by hand.

"I'm just so completely awed by this technology," says Sonia Arrisonof tech analysis group Pacific Research Institute. "Basically, anything that relies on computing power will accelerate."

Arno Penzias, a venture capitalist and Nobel Prize winner for physics, says, "This diamond-fabrication story marks a high-profile milestone on an amazing scientific journey."

"We can't begin to see all the things that can happen because single diamond crystals can be made," says Apollo co-founder Robert Linares, elegant and slim in a golf shirt, slacks and loafers as he sits at the two plastic folding tables that make up Apollo's low-budget conference room. "We are only at the beginning."

Linares has worked on the technology for 15 years, much of that time in his garage. From the start, he did this because of the promise of diamonds in technology. Linares wasn't trying to make gems. In fact, he didn't think he could.

Then he had a happy accident. Well, actually, time will tell whether the accident was a happy one.

In 1955, General Electric figured out how to use room-size machines to put carbon under extremely high pressure and make diamond dust and chips. The diamond material wasn't pure or big enough for gems or digital technology. But it had industrial uses, such as diamond-tipped saws. Such saws made it possible, for instance, to cut granite into countertops.

In the ensuing decades, companies and inventors tried to make bigger, better diamonds. But they didn't get far. By the 1990s, researchers were focused on two different paths to diamonds.

One was brute force. Some Russians became pretty good at it, and their machines were eventually brought to Florida by Gemesis. That company now crushes carbon under 58,000 atmospheres of pressure at 2,300 degrees Fahrenheit, until the stuff crystallizes into yellowish diamonds. The stones are attractive for jewelry but not pure enough for digital technology. Gemesis sells its gems through retailers at around $5,000 per carat. A mined yellow diamond can cost four times more.

The other process is called chemical vapor deposition, or CVD. It's more subtle. It uses a combination of carbon gases, temperature and pressure that, Linares says, re-creates conditions present at the beginning of the universe. Atoms from the vapor land on a tiny diamond chip placed in the chamber. Then the vapor particles take on the structure of that diamond — growing the diamond, atom by atom, into a much bigger diamond.

CVD can make diamonds that are clear and utterly pure. It's also a way to make diamond wafers, much like silicon wafers for computer chips. The CVD process can be tweaked by putting in enough boron to allow the diamond to conduct a current. That turns the diamond into a semiconductor.

A handful of companies and scientists, including Sumitomo in Japan and the global diamond powerhouse De Beers, have chased CVD. But by most accounts, Linares is out front.

After receiving his doctorate in materials science from Rutgers University, Linares joined Bell Labs and worked on crystals that would be crucial in telecommunications. In the 1980s, he started Spectrum Technology to make single-crystal Gallium Arsenide chips, one of the key components in cellphones. Spectrum became the material's biggest U.S. supplier, and Linares eventually sold the company to NERCO Advanced Materials.

He then dropped out of business, putting his time and money into his pet project: making CVD diamonds for cutting tools and electronics. "Gemstones were the furthest thing from my mind," Linares says.

Linares built machines in his garage, superheating carbon in suburban Boston while his neighbors went about their lives. He got the CVD process to work, at first making tiny diamond chips. He formed Apollo and started down the path to industrial diamonds. Then Linares inadvertently left a diamond piece in a beaker of acid over a weekend. The acid cleaned up excess carbon — essentially coal — that had stayed on the diamond.

"When I came in Monday, I couldn't see the (stone) in the beaker," Linares says. The diamond was colorless and pure. "That's when I realized we could do gemstones."

For Apollo, there are lots of good things about making gems. Diamond jewelry will be a $60 billion global market this year, and it's growing fast. If Apollo can snag just 1%, the company would become a $600 million rocket.

Also, gems could become a source of revenue quickly. While the military and companies are working on tech inventions that use diamonds, a real market for diamond technology might be a decade away. By selling gems, Apollo can make money now to fund the research for forthcoming diamond tech products.

That solution, though, brings two huge problems. One is that Apollo doesn't know the gem business. Its employees are technologists. Aside from Linares, Apollo is run by his son, Bryant, an MBA who started and sold an information services company. Vice President Patrick Doering had been lead scientist at Spectrum.

"We are not gemstone guys," Bryant Linares admits. They don't know consumer marketing or retailing. Bryant Linares notes that Apollo plans to split into a tech business run by the Linareses and a gem business run by a gem veteran they have yet to hire. For now, though, the gem business is a distraction with a steep learning curve.

Apollo's other problem is De Beers, which doesn't like what Apollo is doing one bit. De Beers launched a public relations campaign and an education program for jewelers, all aimed at portraying mined diamonds as real and eternal — and CVD or Gemesis diamonds as fake and tacky.

Both Apollo and Gemesis want to market their gems as "cultured diamonds," taking a cue from cultured pearls. De Beers is fighting that label. "It's misleading and unacceptable," says De Beers executive Simon Lawson. "It makes people think (manufacturing diamonds) is an organic process, and it's not."

Even highly trained diamond experts find it almost impossible to tell a CVD diamond from a mined one. De Beers is determined to help by making machines that can detect the slightest difference in the way the two materials refract light.

As part of that effort, De Beers stepped up its own CVD research "focused on producing state-of-the-art synthetic diamonds for testing on our equipment," Lawson says. Referring to CVD diamonds, he adds, "We don't see gemological applications fitting into it."

So by getting into gems, little Apollo made a powerful, determined enemy.

The tech side is an entirely different story. Just about every entity in technology can get excited about diamonds.

The military's DARPA research arm has been pumping money into CVD projects. Companies such as Lucent are on the trail of holographic optical storage, which will use lasers to store data in 3D patterns, cramming huge amounts of information in tiny spaces. CVD diamonds would vault holographic storage ahead, helping bring about the 10,000-movie iPod.

Tech company Textron is a big fan of Apollo. Textron has been working on super lasers that might become weapons or be used like a camera flash for spy satellites, so they could take photos from space at night.

"Thermal management is a major challenge to increasing a laser's power," explains Textron scientist Yulin Wang. The diamond has the highest thermal conductivity of any material, which allows it to quickly move heat away from the laser's insides. Textron needs large, pure diamond pieces for its lasers and finally found them at Apollo.

CVD diamonds can help solve one of the computer industry's biggest challenges. Companies such as Intel advance computer chip technology by squeezing microscopic wires closer together while making the chips run ever faster. But that's making the chips increasingly hotter. At some point this decade, the chips could run so hot they'd melt. But not if the chips were based on diamond wafers instead of silicon.

"Using diamonds as semiconductors will continue Moore's Law," says Pacific Research's Arrison, referring to an observation about the continual increase in speed and power since chips were invented.

The list of possibilities for man-made diamonds goes on. "By most measures, diamond is the biggest and best," says a research paper written about CVD by Paul May at the U.K.'s University of Bristol. It's the hardest material, it won't expand in heat, won't wear, is chemically inert and optically transparent, May says.

"Once (manufactured) diamond is available, developers will find all kinds of other things to do with it," Robert Linares says.

Manufactured diamonds will be like other inventions that were so profound because they made new things possible. Steel allowed engineers to dream of skyscrapers and suspension bridges. Transistors led to computers and pacemakers and so much else. So this may be the beginning of the diamond age of technology.

Says Linares: "The genie is out of the bottle, and it can never be put back in."