Such a drastic expansion of Apple-related show floor space will no doubt inspire speculation that the Mac maker plans to put in an appearance at CES. But that seems unlikely given the company’s reasons for bowing out of Macworld. “Apple is reaching more people in more ways than ever before, so like many companies, trade shows have become a very minor part of how Apple reaches its customers,” the company said at the time. “The increasing popularity of Apple’s Retail Stores, which more than 3.5 million people visit every week, and the Apple.com website enable Apple to directly reach more than a hundred million customers around the world in innovative new ways.”

In any event, this is unfortunate news for Macworld and IDG, the publishing company that runs it. Without Steve Jobs or even Apple (AAPL) to help it upstage CES as Macworld has done in some years past, the event has far less to offer attendees and presenters than before. Certainly, no one is going to be decamping from Vegas in the middle of CES this year to hit Macworld. There’s no reason to. And with CES ramping up its efforts to woo Apple accessory manufacturers and retailers, well, things aren’t looking too good for Macworld, are they?

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Seems that in the end, Palm (PALM) decided it would be folly not to match the $199 price of Apple’s (AAPL) iPhone, though according to CEO Ed Colligan, the Pre is far superior to it. Asked at the Consumer Electronics Show if Palm would try to take market share by undercutting the iPhone on price, Colligan told MediaMemo’s Peter Kafka, “Why would we do that when we have a significantly better product?”

Perhaps, because you must? As J.P. Morgan analyst Paul Coster noted this morning, “The $199 price point was absolutely necessary, in our view, to go head to head with RIM and Apple.”

Interestingly, this means the Pre will indeed ship just days before Apple’s Worldwide Developers Conference, the event at which the company is expected to announce its next-generation iPhone. Which suggests that perhaps, as I theorized yesterday, Palm is hoping the Pre will benefit from the iPhone halo. “By debuting so close to the presumed announcement of the iPhone, Palm would be ensuring that its new device is fresh in the minds of anyone mulling the purchase of Apple’s latest offering–or writing about it,” I wrote. “It would be parasitically riding on the back on the Apple media juggernaut. Question is, can it hang on without getting trampled?”

It has not yet been given a price or a release date, but Palm’s forthcoming Pre handset continues to have a remarkably restorative effect on the company’s share price. It wasn’t so long ago that Palm shares were trading just above a dollar. Today, they’re hovering around $8.67, bouyed up by little more than the device’s Consumer Electronics Show debut, an uneventful media Webcast, some hyperbolic remarks from one of the company’s investors and the enthusiasm of a few bullish analysts. Among them, Deutsche Bank’s Chris Whitmore and Jonathan Goldberg, who boosted their price target on Palm (PALM) to $12 from $10 today claiming that Palm will not only ship the device on schedule, but will follow it up with other form factors. “Since their earnings release last week, we have conducted a round of checks on Palm and remain confident in the potential for their new Pre smartphone to turnaround the company’s results,” the two wrote in a note. “The Pre timetable seems on track at least, and both carrier and developer interest remains high….We also confirmed earlier checks and vague hints on their recent call that the company is working on other form factors which we could see in the market sooner than expected.”

Quite a vote of confidence. Though to be fair, it’s not shared by everyone. Certainly, Needham analyst Charlie Wolf is looking askance at claims that the Pre will turn out to be Palm’s iPhone. “The stock appears fully valued even if the Pre turns into a stunning success,” he wrote in a recent research note. “To have management tell it, WebOS is the best thing since sliced bread and the Pre is a thing of beauty. Obviously, with the platform launch still weeks away, it’s impossible to challenge them.”

A surprising turn of events. Because as recently as Friday, it seemed very much business as usual for Watkins, who had the uniquely unpleasant task of announcing a forthcoming round of layoffs while at the Consumer Electronics Show last week. “We are going to announce another round, and we think we’ll do it in January,” he told Bloomberg on Jan. 9. “There will be restructuring, and there will be some layoffs.”

And, indeed, it appears there have been. Not only has there been an abrupt change in leadership, but according to a new filing with the SEC, Seagate plans to sack about 10 percent of its U.S. workforce as part of a restructuring plan that “will impact a broad range of departments, including research and development.” It is, of course, “being done in response to the current economic environment.”

“Innovation is the best medicine to end economic stagnation,” Shapiro said. Well, if that’s the case, perhaps we need to up the prescription a bit. Because for 2009, the CEA is projecting a 0.6 percent drop in revenue–if all goes well. Things should be better in 2010, which, according to Shapiro, will herald a return to growth in the industry. Again, if all goes well. Says Shapiro, “Innovation is the moon that will cause the economic tide to blossom.”

Innovation is the moon that will cause the economic tide to blossom.

And rising on that economic tide, a million little remote-control boats, each with a little corporate logo and a diminutive CEO. And all of them, to a one, sailing forth into a new dawn of profitability. A profitability brought forth by growing unit sales, which are the sun, its every ray a glorious new revenue stream refracted in the glistening waves.

We’ve learned and struggled for a few years here figuring out how to make a decent phone. PC guys are not going to just figure this out. They’re not going to just walk in.”

– In 2006, Palm CEO Ed Colligan utters the words he’s been choking on since the debut of Apple’s iPhone

For Palm (PALM), which lost two-thirds of its market value in 2008, today may well be a watershed event–the point at which its long downward trajectory was suddenly reversed, buoyed up by a new operating system too long in coming. At a Consumer Electronics Show event later this morning, the company is expected to uncrate its Nova OS and a line of Nova-powered offerings with which it hopes to reinvigorate the Palm franchise.

Hope, of course, is the operative word here. Because while insiders describe Nova with superlatives typically reserved for the likes of Apple (”We’re onto something huge,” Palm engineer Mike Bell recently told BusinessWeek. “Some of the stuff we’re working on here is mind-blowing.”), Palm’s platform and its business remain very much a show-me story–or rather a you-can-show-me-but-I-probably-won’t-believe-you story. Consider this late December research note from Needham analyst Mark May:

Although the new platform is unlikely to challenge any of the competing smartphone platforms, the credentials of Palm’s engineering team lend a modicum of credibility to this possibility…. Palm is on the verge of oblivion. While the company has traded water the past three years, new competitors, such as Apple (AAPL) and Google (GOOG), have entered the market while others, such as Research In Motion (RIMM), have gotten much stronger.

Clearly, May isn’t buying Palm’s “we’re onto something huge” claims. That said, there’s no reason to dismiss them–just yet, anyway.

Our industry is the one that this going to get the economy through this recession.

– Gary Shapiro, president and CEO of the Consumer Electronics Association

The International Consumer Electronics Show will kick off next week shrouded in a nimbus of recessionary gloom. Show attendance is expected to be down eight percent this year, according to Gary Shapiro, CEO of the Consumer Electronics Association, who expects 130,000 attendees to flood the convention–11,000 fewer than last year. The show floor itself will be slightly diminished as well. CES exhibitor booths required 1.8 million square feet in 2008. In 2009, they’ll take up 1.7 million, presumably thanks to the absence of Seagate (STX), Logitech (LOGI), Cisco (CSCO), Philips (PHG), Yahoo (YHOO) and Sanyo–all of which have abandoned plans to exhibit on the show floor. That said, the overall number of exhibitors will remain the same as last year, at about 2,700.

So the show will be a bit smaller and a bit less clamorous than in years past. Likely a bit more sober as well, given this rough retail year. Quite a change from the extravagance of years past, but not without a certain upside. “This is the bleakest CES in 30 years going in,” said Envisioneering Group analyst Richard Doherty. “[Some exhibitors] will be spending more of their time off the show floor. We may now be able to get between the Venetian and the convention in less than an hour.”

We’ve learned and struggled for a few years here figuring out how to make a decent phone. PC guys are not going to just figure this out. They’re not going to just walk in.”

– In 2006, Palm CEO Ed Colligan utters the words he’d be choking down two years later.

The invitation-only event Palm plans to hold during the 2009 Consumer Electronics Show in early January promises “all that Palm New-ness you’ve been waiting for”–“new-ness” presumably referring to the company’s new Nova operating system and the first line of products to run on it. And after five straight quarterly losses and a year in which it lost two-thirds of its market value, Palm (PALM) best deliver on that promise. Because Wall Street is fast losing its patience with the much diminished handset maker, which, according to Gartner (IT), holds a paltry 2.1 percent of the smartphone market. Indeed, Canaccord Adams analyst Peter Misek essentially threw in the towel on the company Wednesday slapping Palm with a Sell rating at a target price of zero.

“Due to increased competition in the industry, Palm has lost its place as a leading smartphone manufacturer and has gradually become less relevant as more competitors have introduced more innovative smartphone devices,” Misek explained. “The company is financially distressed and lacks any viable future catalysts which could help restore profitability…. We believe that Palm has become largely irrelevant in the smartphone space due to a series of strategic errors and poor execution. With very little balance sheet flexibility to mount a comeback, we believe that Palm shares remain a very risky bet, even at current valuation levels.”

Ouch.

Clearly, Misek doesn’t put much faith in the Palm New-ness that will be on display at CES next month. But there are others who do. Said Mike Bell, a 16-year Apple (AAPL) veteran who joined Palm last year: “I’m fundamentally convinced we’re onto something huge. Some of the stuff we’re working on here is mind-blowing–better than anything I’ve seen before.”

Hard to believe, given what we’ve seen from Palm these past few years. But perhaps Bell’s right. We’ll find out next month.

Not Seagate (STX).

Not Logitech (LOGI).

Not Cisco (CSCO).

Not Philips.

Not Yahoo. Obviously.

And not Sanyo, either.

All six companies have abandoned plans to exhibit on the Consumer Electronics Show floor. Like Belkin, they are all opting for the more intimate and inexpensive floorspace of a Vegas hotel room. Said Seagate spokesperson Woody Monroy, “We haven’t pulled out of CES…we’re just taking a different approach.” Cisco offered this statement on the matter:

On our Q1 FY ‘09 earnings call on November 5 we announced that we will be reducing expenses for FY09 by over $1B from our annualized expense run rate, given the challenging macroeconomic environment. We are targeting reductions in travel and discretionary-related expenses, including offsite meetings, outside services, equipment, events, trade shows, prototypes, marketing and other activities. Given this focus on reducing costs, we are modifying our participation in the Consumer Electronics Show in Las Vegas in January 2009.

We have several speakers presenting in the various CES sessions, and Cisco chairman and CEO John Chambers will be delivering a keynote at the conference, as well. We are focusing our CES presence on our direct customers, press and analysts in order to create a more intimate event and reduce expenses. We look forward to an exciting CES 2009 with multiple product announcements that will reinforce Cisco’s consumer strategy. We remain committed to the consumer market, and we believe our cost control focus at this time is appropriate. In support of our CES presence, we will be utilizing Cisco’s world-class Web 2.0 collaboration technologies, such as TelePresence and WebEx, to maintain essential customer and partner communication. Cisco will have compelling demonstration areas and meeting rooms in the Venetian hotel in Las Vegas as we have for the past several years.”