Cyberpunk fantasy - or how I learned to stop worrying and combine magic and technology

The short story collection I'm working on takes place in a world I've been working on creating for quite a while. It's not Earth, but it's not a defined "alien" world colonized by humans. It's just another place, like Discworld or Narnia or Westeros. So that makes it fantasy rather than sci fi, right? Also, there's magic in it.

But the world also contains modern/futuristic technology - flying cars, computers, gadgets and gizmos, digital teeth, all of which are powered and operated by a combination of straight up technology and a little bit of magic. Examples:

-Buildings are hexed to be "bigger on the inside" (yes, like Doctor Who but with magic) 

-One of my main characters practices "datamancy," the act of using magic to hack computer systems - she summons "daemons" to infiltrate data systems, crack code, and the like. I'm still figuring out how all that works.

-My main PI character can take an image he has in his mind of someone and use magic to transfer it onto photo paper, then upload that photo to the 'net and do a search on that person.

So here's my question, my desire to brainstorm some of this with you.

The main complaint/critique/question/blank staring face thing I get from people is this: If there's magic, why bother with technology - why combine the two? 

Well, my answer is this: Why would the existence of magic as a known quantity within society cause that society to stop development in a Medieval fantasy setting, as is so often the case with fantasy? What does Middle Earth look like in a thousand years? Is everyone there really content with fantasy feudalism forever, or would an industrial revolution happen eventually? I mean yeah we can get into arguments about the Orcs being a symbol of the pitfalls of industrialization, especially during the battle with the Ents, but that's beside the point, isn't it? What does an industrial revolution and the development of modern tech look like in a world where everyone knows about and incorporates magic into their daily lives? 

Substitute Middle Earth with Discworld and I have the same question. And Sir Terry addressed my question a little bit with books like Raising Steam, where we see the development of a railroad. He did take Discworld out of a Medieval/Renaissance setting a little bit, but not by much. Brandon Sanderson ...I really don't want to talk about Mistborn, but it is my understanding that the later books after the first trilogy take place in a similar modern tech/magic setting. China Mieville has New Crobuzon, a sort of steampunk surrealist masterpiece that shatters genre boundaries and does in fact take place in an industrialized world with a little bit of magic in it. Dune can be argued to be science fantasy, because there's a little bit of magic inherent in Spice vision, but it also takes place in a society that has shunned technology and gone back to a kind of spacefaring feudalism. 

But then the second question comes, and I don't really have a good answer for it: What are the rules of magic in my world? When someone picks up a hand terminal (data tablet, handheld computer thing...) that is powered by a combination of actual technological hardware and magic, where does the one end and the other begin? 

My answer so far has been thus: Technomancy, the science of combining technology and magic, requires that each gadget begin with a totally magic-free foundation. The motherboards, chips, memory cards, all the hard wired stuff, has to be entirely technological. Magic only comes in when the item is imbued with power - maybe it has a magical everlasting battery. Maybe it uses a magical networking protocol that accesses the 'net through means other than traditional radio waves. Maybe it's hexed in some other way.

Same thing with vehicles. The car itself, the physical hardware of the car - wheels, engine, sheet metal, whatever, has to be physical, material, non-magical. But then it can be imbued with magic to operate - endless fuel, flying capabilities, things like that. 

So this post has gotten a lot longer than I intended.

Anyway. You folks interested in cross-genre stuff. What do you think? What tips can you give me to create a coherent tech-fantasy cyberpunk-ish magic-having kickass world that you can wrap your head around and totally believe?