The Wallet MP3 is only slightly thicker than a credit card, and it plugs directly into a PC. Image: Jon Fortt

LAS VEGAS – At the Consumer Electronics Show, you often find those geeky product gems tucked away in a little booth away from the action. That’s where I spotted the Wallet MP3.

It’s an MP3 player the size of a credit card, complete with a USB connector that plugs into a computer. (It actually works; I tried it.) Walletex, the Israeli company that makes them, says the card gets five hours of battery life and charges via USB in 90 minutes. It holds 2 gigabytes worth of music, twice as much as Apple's (AAPL) iPod shuffle.

Why would you want an MP3 player the size of a credit card? If you have to ask, you lack geek cred. It’s cool because it’s weird. Good luck getting your hands on one, though; Walletex doesn’t do retail. They sell these, and identical card-size storage drives, to businesses that want to offer snazzy giveaways to their clients.

Sony's XEL-1 flat TV with OLED technology drew big crowds at the Consumer Electronics Show. Image: Jon Fortt

LAS VEGAS – After chatting with Sony Electronics President Stan Glasgow, I had to see what the hype was about. So I headed over to Sony’s booth here at the Consumer Electronics Show to check out a $2,500 flat-panel TV with a screen a little bigger than paperback book.

Yes, at 11 inches, it’s that small. So what makes the XEL-1 worth as much as an HDTV 10 times its size?

The picture. This TV delivered the sharpest, most eye-popping video I’ve ever seen. Blacks on the screen were completely black. My immediate emotional response was, “must have it.” And apparently I wasn’t alone.

Teenagers, businessmen, and elderly couples were all ambling into the Sony (SNE) booth like zoo-goers looking for a baby panda. Most seemed to make their way to the mini-stage at the center of the display area, where Sony had about a dozen of the little OLED TVs roped off and set up like jewelry. The crowd oohed and aahed and snapped pictures.

It’s tough to overstate the significance of the little TV’s popularity. Flat-panel screens at CES are like leaves in the forest. They’re everywhere. For people to crowd around one specific model — especially one this small — means they saw a visible difference in what those TVs delivered.

OLED, which stands for organic light-emitting diode, uses a technology completely different from its better-known flat-panel sibling, the LCD. OLED displays don't require a back light, which allows a higher contrast ratio, less energy consumption and a thinner design. (Some have raised concerns that OLED screens wear out quickly, but Sony said its displays should last 30,000 hours.)

Does that mean the XEL-1 will be a big seller? Not even Sony expects that. Glasgow told me that the company is building and selling them in retail qualities mainly so that it can learn about the technology, and figure out how to manufacture the panels less expensively and in larger sizes. While the technology industry has developed standard ways of making LCD screens, OLED is still a bit of a mystery; each of the companies experimenting with making the screens does it a little differently.

Glasgow does believe that OLED is the future of television, and that while it took LCD about 18 years to go from cool idea to mass-market product, OLED will develop much faster. Whether much faster means affordable OLED is 10 years away or three, he wouldn’t say — but in the meanwhile, he and Sony’s marketing executives are surely enjoying the big buzz they’re generating with their little TV.

Pioneer showed off concept TVs that offer a first: near-absolute black in a flat-panel display, providing brilliant contrast. Image: Jon Fortt

LAS VEGAS – In the United States, plasma televisions are losing the high-def battle with LCD screens. But at the Consumer Electronics Show, plasma backers including Pioneer and Panasonic clearly believe it’s not over.

Plasma’s problem has always been the side-by-side comparison with LCD on the showroom floor. Because LCD screens tend to be brighter and thinner, consumers tend to judge it superior, even though good plasma sets can provide truer colors and better contrast ratios for a lower price.

Pioneer had one of the more eye-popping previews in its booth: TVs based on its “Project Kuro,” which alludes to the Japanese word for “black.” Pioneer set out to achieve the blackest blacks it could in its plasma sets, reasoning that black is the canvas on which color is displayed, so high contrast will make colors pop more. Walk around the booth, and the effect is obvious: color oozes seductively from of the screen, particularly in scenes that offer high contrast.

Pioneer also showed a 50-inch display that’s just 9 millimeters thin and 41 pounds – an offering that would certainly turn heads the local Best Buy or Circuit City. Still, there’s no word on exactly how much the sets will cost and when they will be available — Pioneer said only that it won’t be this year.

Panasonic also voiced its continuing support for plasma, showing off a 150-inch set. Yoshi Yamada, CEO of Panasonic North America, told Fortune the company remains committed to big-screen plasma, though it offers LCD TVs as well. Some competitors are pushing just LCD, “because it’s easy,” Yamada said. With plasma, “there is more research and development required to make it a real TV.” Panasonic has done that work, he said, and “as far as we are concerned, we see in a lot of the areas, plasma does a lot better.”

It’s not clear how any of this might change the game in store showrooms, where plasma is fighting an uphill battle.

Stan Glasgow, president of LCD-exclusive Sony Electronics (SNE), seemed to acknowledge the plasma camp’s efforts, but couldn’t resist slipping in a dig at his rivals. “I think it’s going to be an interesting year in terms of plasma, what they’re going to do as they keep losing share in the United States.”

The innovative Rolly robotic speaker system, which is not yet available, is emblematic of the company's improved fortunes. Image: Sony

LAS VEGAS – After a rough couple of years, Sony is beginning to look like its old self.

It might be too soon to declare a total comeback, but the electronics giant finally seems to have momentum. Those quarterly losses that at times topped $500 million as Sony (SNE) struggled to turn around its core electronics business? They’re not quite a distant memory. But here at the Consumer Electronics Show, Sony does exude a confidence it hasn’t shown in a while.

At a dinner with journalists Monday night, Sony Electronics President Stan Glasgow was upbeat. Despite the slowing economy, consumers responded to Sony’s risky $100 million marketing campaign, and turned out in force to buy high-definition TVs, camcorders and other gear in November and December. The industry support for Sony’s Blu-ray format for high-definition video is also encouraging. “I think across the board we demonstrated we had a good holiday season,” Glasgow said.

Sony executives didn't reveal specific sales figures but said that the company recorded double-digit revenue growth in 2007 over the previous year.

“I’m excited about our little video product, the Walkman," Glasgow said. "It sold out over the holidays. I think we learned that going open and not keeping as much proprietary has some very positive effects sometimes.”

The new open mentality at Sony appears to be more than a fad. Sony Electronics executives said they were surprised by customer enthusiasm for its embrace of the MP3 and WMA formats in its media players. And even the corporate culture is opening up. At a recent corporate rally, Welsh-born CEO Howard Stringer sat company’s newest, most fired-up engineers closest to the stage, in the auditorium’s front-row seats in the middle section. The clear message: It will take new energy and new ideas to secure Sony’s future.

That message of change carried over to the Sony booth here in Las Vegas. Rather than organize products by business unit, Sony for the first time organized them by how they are used. Home entertainment devices are all together, whether they are game consoles, Blu-ray players or PCs. Mobility products are together as well. The approach is reminiscent of an Apple (AAPL) Store, where the company groups products together to show customers how they might get work done.

Not everything at Sony is going right. The PlayStation 3 and PSP are losing this round of the video game console wars to Nintendo’s Wii and DS. Sony Pictures Entertainment also faces challenges, with the Hollywood writer strike and declining DVD sales. But it’s the core electronics business that supplies 75% of Sony’s revenues, and the change in fortunes there brightens up everything else.

As Piper Jaffray's Gene Munster walked the floors of the 2008 Consumer Electronics show he, like many other attendees, found himself thinking about Apple (AAPL) and Steve Jobs.

"While Apple was not at the show," he writes today in a report to clients, "the company's impact is felt at CES."

Signs of the company's influence, he says, were evident in three broad areas:

• Hardware design. "The simple, industrial design that began with the iPod and has carried over to Apple's Macs and the iPhone, is a general trend that we see in CE devices. iMac-like all-in-one desktop computers from Dell and Gateway, for example, are two instances of other device makers following Apple's lead."
• Touchscreen devices. "Apple's iPhone represents a consumer-ready level of maturity for touchscreen devices… Touchscreen device makers like Samsung are following Apple's lead, but we believe Apple is significantly ahead of other device makers (except perhaps Microsoft)."
• Ecosystem connectivity. "Apple's closed iTunes+iPod ecosystem has enabled the company to set the bar in terms of hardware and software integration… This year at CES several companies are pushing to catch Apple in terms of connectivity. Such products included the Sandisk Take TV, wireless streamers, and other connected entertainment devices that offer a non-iTunes competitor to Apple's entertainment ecosystem."

Like CES 2007, when the buzz of the show was the soon-to-be-unveiled iPhone, much of the talk this week in Las Vegas was about what might be coming next week in San Francisco.

As Munster puts it:

"We expect Apple's Macworld announcements (1/15) to set the bar for CES '09 — in other words, we see Apple as effectively one year ahead of its competition."

LAS VEGAS – Why did Warner Bros. choose last week to exclusively back the Blu-ray format for high-definition DVDs and ditch HD DVD, a move that could end the bitterest battle in the electronics industry?

Warner Bros. Home Entertainment President Kevin Tsujihara said there's evidence that holiday DVD sales were a casualty of the format war between Blu-ray and HD DVD. Image: Warner Bros.

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Partly because the studio's research turned up an alarming trend: the next-generation format fight hurt overall DVD sales this holiday season.

DVDs have become an important piece of Hollywood’s revenue pie, and an unexpected dip in sales can be painful. And that's exactly what happened in the fourth quarter, according to Warner, when DVD sales fell from the previous year.

And you can't just blame the economy, or the popularity of video games. Here at the annual Consumer Electronics Show, Kevin Tsujihara, president of Warner's Home Entertainment Group, told Fortune that with high-definition TVs selling briskly and a strong summer at the domestic box office that topped $4 billion for the first time, Hollywood executives expected a merrier Christmas than the one they got.

"We saw evidence that the format war was actually hurting standard definition," Tsujihara said. "The industry had very high expectations for the fourth quarter. The summer was the highest box office quarter in history. We ended up the year somewhere down 2 percent or a little bit more than 2 percent. That was a little disappointing, given the summer we had." Warner Bros. and Fortune are both owned by Time Warner (TWX).

Market research showed it wasn't just NetFlix (NFLX) or Apple’s (AAPL) iTunes hurting traditional DVD sales, either. Consumers who bought HDTVs were so afraid of backing the wrong high-definition movie format that they decided not to buy movies at all.

"Consumers were confused by the format war, and they were saying they weren't going to make a decision on either for a while, until they could figure out which one to buy," Tsujihara said. "Salespeople were having a hard time telling people why they should convert to HD."

So Warner Bros. made a call. Based on consumer trends, which have shown Blu-ray movies outselling HD DVD 2 to 1, Blu-ray was the obvious choice.

Still, Hollywood's not out of the woods yet. Though Warner's move gives Blu-ray a clear advantage over HD DVD, there's no guarantee the masses will embrace either disk format. It's up to industry marketers to devise a way to convince consumers that it's a good idea to keep buying movies on discs, rather than rent or download them.

Those strategy sessions are increasingly at the heart of CES, a show that used to focus on the nuts and bolts of electronics. Hollywood dealmakers descended on Las Vegas in force this week to hobnob with technology and retail executives in the hotels along the Strip and, they hope, hit upon a formula that will reinvent the business of entertainment.

"It’s become more important to us, especially as it relates to digital distribution,” Tsujihara said. "Longer term we believe that the growth for our industry is going to come from transitioning that standard definition player base to higher definition, and transitioning some of that to digital distribution as well."

With 1.83 million square feet of floor space to cover, it's not easy to gather in one place the 600 media representatives who have flocked to Las Vegas for the orgy of marketing excess that is the 2008 International Consumer Electronics Show. But in the press lounge on Sunday, Valleywag's Jordon Golson found 129 reporters and bloggers (they wear different badges this year), and he used the opportunity to take a survey of what machines they were using.

His count: 94 Windows PCs and 35 Macs (including his MacBook Pro). That's a 27% market share for Apple (AAPL) — considerably higher than the 7.3% reported in the latest Net Applications survey. The numbers are sure to be even more skewed Cupertino's way when a different subset of the tech press gathers in San Francisco for Macworld next week.

No wonder Apple gets more than its share of ink — and pixels — in the technology press.

[Photo courtesy of CES]

Bill Gates is offering his view on the tech landscape he shaped. Last year, the Microsoft chairman used his CES keynote to tout ideas including an in-car technology partnership with Ford. Image: Consumer Electronics Association

LAS VEGAS – Microsoft Chairman Bill Gates used his last speech opening the technology industry's biggest trade show Sunday night to announce that the software giant will challenge rivals such as Apple (AAPL), Sony (SNE) and Adobe Systems (ADBE) with new initiatives in phones, online video and the Xbox 360 gaming console.

The Xbox 360 in particular got a number of updates. In a bold step to make the Xbox 360 a multimedia must-have, Microsoft (MSFT) announced that European customers of British Telecom would be able to buy the console and use it as a set-top box as well as a game machine. And the Xbox platform will become a host for video downloads as well; ABC and Disney will sell TV shows through the Xbox Live service, and MGM will offer movies. Increasing the reach of the Xbox platform, Hewlett-Packard (HPQ) and Samsung will use similar technologies in devices such as TV sets.

Much of what Gates talked about to open the Consumer Electronics Show wasn't new – he spent a lot of his time on stage in Las Vegas reminiscing about his past speeches and recounting the progress Microsoft has made in the past year. Members of the press grumbled later that from a news perspective, the keynote itself was sub-par. But Gates did touch on important themes for the larger tech industry, including one that Google (GOOG) likes to trumpet: In the Internet age, tasks like data storage and collaboration will begin on the Web, not in desktop software.

There were also highlights that showed Microsoft's competitors still have plenty to fear. In a blow to Adobe, whose Flash software has become the dominant method of video presentation on the Web, Microsoft has struck a deal with NBC to present online footage from this summer's Olympic games using Microsoft's new Silverlight software. "It's going to let us illustrate why TV is going to be very different," Gates said.

Further, Microsoft suggested that the revamped Zune media player, which competes with Apple's iPod, is shaking its dud reputation. Robbie Bach, president of the entertainment and devices division, argued that the Zune is becoming "the clear alternative" to Apple's device, and said that the company is confident enough to begin selling it outside the U.S. for the first time this spring, when Zune will be available in Canada. If the Zune is indeed gaining a following, that could cause problems for Sony and SanDisk (SNDK), which are also vying to be the anti-iPod.

For Gates, this was a swan song of sorts. During most of the last decade, he and another tech icon, Steve Jobs, have chosen January conferences to present their different views of where technology is headed. Apple co-founder Jobs has held forth on the stage at Macworld in San Francisco, while Gates did so here in Las Vegas, where CES has increasingly focused on how PC and Internet technology is changing everything about how the world works, plays and communicates.

But on Sunday night, half of the Gates/Jobs era came to a close. Gates, the central figure in the age of the personal computer, is scheduled to retire this summer from full-time duties at Microsoft, and dedicate more time to his philanthropic work. That means Gates offered, for the last time, his front-seat view of how technology has changed the world, and more important, what's likely to happen next.

It was the future-focused ideas that provided the flashiest demonstrations Sunday. Bach and another Microsoft manager demonstrated voice recognition in a phone that allowed them to say "movies" and call up all of the nearby theaters in Las Vegas. By then saying "two tickets to Sweeney Todd at 9:20," they were able to make arrangements to see the show, all without the hassle of tapping through menus on a phone keypad.

A final demo from Gates also offered interesting possibilities. After introducing it as something Microsoft is developing in its research unit, Gates showed off image recognition in a cell phone. Using the built-in camera, the software was able to identify that Bach was the person onstage with Gates, and that he owed his boss $20. Gates demonstrated how such technology might also be used to identify buildings along the Las Vegas Strip, and provide immersive, step-by-step directions showing where a certain restaurant is located and how to get there.

Gates also displayed his lighter side. He showed a video with various Microsoft employees and celebrities lampooning him, joking that with all of the free time he'll have after he leaves his full-time post in June, he'll try to launch careers for which he is supremely unqualified. In the video Gates called rock star Bono, hoping to try out as a lead guitarist for U2; he also called presidential candidates Hillary Rodham Clinton and Barack Obama asking to be their running mates. In one of the funnier moments, Gates was shown in a studio rapping, "Big pimpin', I'm Bill G.; big pimpin', yeah, you know me" while hip-hop impresario Jay-Z looked on, somewhat horrified, from the sound booth.

Journalists prepare for the start of the Sony pre-CES press conference. Image: Jon Fortt

LAS VEGAS – Fresh from its news that Warner has backed its Blu-ray format for high definition, Sony (SNE) is vying to show that it is still an electronics innovator, and isn't languishing in the shadow of iPod maker Apple (AAPL).

To that end, the electronics giant said it will immediately begin selling an 11-inch version of a super-slim TV in the United States. The TV uses OLED techonology, which allows devices to be thinner than today's LCDs and more power efficient. Sony also showed off new cell phones, cameras and the Rolly speaker system, a novel egg-shaped robotic speaker system that actually moves to the sound of the music it plays. Below, the way the Sony press conference unfolded:

The press conference has begun.

In a video, Sony is showing its Rolly, an odd speaker system that sort of dances and rolls on the floor.

The senior VP of the digital imaging and audio division is taking the stage. He's making the case that in digital entertainment and devices, all roads lead to Sony. "Rolly is a sophisticated piece of entertainment technology," he says, and the camera turns to one dancing around on stage. "Simply stated, it provides a new way to listen and enjoy music out of the box." A push of the button gets things started he says, allowing it todance to its own beat. It will be available in limited quantities at the beginning of the year.

He's now talking about the Walkman video players, saying Sony kept its fingers crossed when it launched. He's calling the reaction tremendous in the U.S., saying it's getting Sony recognized in the audio and video space again – but he doesn't give numbers to prove that Son'y gaining on Apple.

Next he quickly touts the PSP, Playstation Portable.

Now he's announcing the mylo personal communicator, a wireless handheld with a keyboard that allows you to IM, take photos, and use Adobe (ADBE) Flash.

Also, there are new VAIOs. Sony doesn't do desktops, so these are all laptops. He doesn't go into much detail. Now he's describing the VAIO TP, a high-def device for the home theater that we'll have to find out more about later. He moves on to talk about Sony's noise-canceling headphones and its Sony Reader, an e-book reading device that competes with Amazon's (AMZN) offering. Sony's device now supports PDF.

Now he's moving on to navigation devices – a Nav-U, with 4.8- and 4.3-inch displays. They feature Position Plus, a system that estimates where your vehicle is, even if the GPS signal is lost. They will have Bluetooth included, and will ship next month.

Now the VP marketing for Sony Ericsson is taking the stage to talk about phones.

Sony has done well with the Walkman phone, selling 45 million worldwide as of September, she says. The w760 has an FM radio, stereo speakers, and a slider design. It also has tilt gaming controls, so that you can control action by tilting your wrist. It will be available in q1 2008. It's 3G (Sony Ericsson's first 3G Walkman device), with a 3.2 megapixel camera.

The w350 is an interesting black phone with a gold disk controller in the center that slides down to reveal the keyboard. It's 10 millimeters thin, with a 1.3 megapixel camera. This one could challenge the RAZR's old coolness factor.

The z555 has a diamond-inspired desgin that's sort of garish, but fits today's youth fashions. The coolest feature – you can wave your hand over the phone to silence a ring or snooze an alarm. It comes in two colors: "dusted rose" and "diamond black."

Now Sony's talking about the DVDDirect recorder, an appliance that lets you easily archive images to DVD.

An executive is going through the Cyber-shot camera features, face detection and smile detection.

Camcorders. Sony's got 16 new models tonight, including HD models with solid-state memory built in. These have face detection technology as well. They'll all go on sale this spring. Some will capture 1920 x 1080 resolution. There will be hard disk drive and DVD formats as well.

Now, SLRs. Smaller, faster, steadyshot and dynamic range optimizer. This is more for the pros and semi-pros, as these are bulkier than the point-and-shoots – they're available later this month.

Sony is demonstrating TransferJet, a near-field wireless technology for moving data. (This is yet another proprietary format choice from Sony, and it's having glitches. It's not working at the moment, which is embarrassing for the company. Why does Sony keep building products based on proprietary formats? Didn't they learn from ATRAC3?)

Sony is now touting its experience with HD technology. They're talking up Blu-ray's progress over the past year, including the standalone players and computers. He's announcing an external Blu-ray drive that connects to PCs – it will cost less than $200. He's touting the 2-1 ratio in which Blu-ray is outselling rival HD DVD, and predicts that Blu-ray's lead with expand throughout the year. He touts Warner's move in recent days to distribute HD movies exclusively on Blu-ray by May 2008. "We believe this decision will further strengthen and accelerate the adoption of Blu-ray disk technology," he says.

Now, TVs. Bravias will have an Internet Video Link that will sport walled-garden content from a number of providers. Also, a DMex link will allow you to connect other devices to the TV. The most impressive: wireless HDMI through Bravia Wireless Link. Components can be up to 200 feet away, Sony says.

There's a new series of Bravias today with thin bezels and new colors. Two new models is particular are being shown off now. (Some of this is making be rethink my earlier criticism of Sony's proprietary format choices. Sometimes you have to invent something and put it out there if you want to innovate. The question is whether Sony will license it on friendly terms, or drop it if a more broadly adopted format comes out.)

Stan Glasgow, the head of Sony Electronics, has taken the stage. He says Sony's sales have grown by double digits compared to the year before, and in part it owes to Sony listening to consumers – something the company hasn't done as well in the past. (Two examples of this that he has mentioned to me in the past: the way Sony has moved its music players to open formats, and has begun pricing TVs low enough to be sold in mainstream retailers like Target (TGT) and Wal-Mart (WMT). He says Sony has not been affected by talk about a U.S. recession.)

Glasgow also said Sony will immediately begin selling an 11-inch, 3-millimeter-thick OLED TV in the U.S. for about $2,500. OLED has advantages over the LCD technology now used in most flat-panel televisions; OLED displays are brighter, the images crisper, and the power demands lower.

Sony probably won't sell many of the displays at that price – for $2,500 consumers can buy a $42-inch LCD TV. But by beginning to manufacture the panels in volume, Sony can hope to bring down prices over time. The strategy might yield results for Sony, however; if portable televisions take off, for example, OLED could be the favored technology because its thin dimensions and frugal power use would encourage compact devices with longer battery life.

Trying to pick the winners in '08? Watch these three conferences.

In January, politics has Iowa, New Hampshire and South Carolina. Tech has DEMO, Macworld and the Consumer Electronics Show.

Just as primaries and caucuses define the year’s political landscape, these three big technology trade shows compete to introduce trends that will shape 2008. Each show has its own personality and its own surprises – and its own part in influencing whether a few months from now we’re all clamoring for new iPhones, wireless HD home theaters, or the next challenger to Facebook.

Apple's iPhone announcement at Macworld stole the buzz last January, and for the rest of the 2007. Image: Apple

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Which show will prove most influential?

Though there’s just one company at the heart of it, don’t bet against the Macworld confab in San Francisco, where Apple (AAPL) unveils its latest strategies and dares the digital world to answer the challenge. Apple has always gotten attention – after all, super-showman CEO Steve Jobs could sell candy to Willy Wonka – but the company’s recent momentum helps, too. Apple happens to be the hottest thing in technology right now, with a lineup that includes the trendy iPhone, profit-minting iPod and resurgent Mac.

Though Apple’s iPhone announcement at last year’s Macworld was arguably the most-hyped electronics debut ever, the product itself didn’t disappoint. So everyone will be watching the stage on January 15 to see if Jobs & Co. can do it again in 2008. The thriving Mac rumor ecosystem expects thin, flash-based laptops, a major software update for the iPhone, and movie rentals on iTunes. Bottom line? If Apple has anything to say about it, 2008 will be all about feather-light wireless devices sporting powerful software and video playback.

But first, the rest of the tech titans will have their chance to steal Apple’s thunder. Next week at the mammoth Consumer Electronics Show in Las Vegas, luminaries such as Microsoft (MSFT) Chairman Bill Gates, Intel (INTC) CEO Paul Otellini, and Comcast (CMCSA) CEO Brian Roberts will meet in the desert to share their vision of the future with more than 140,000 attendees and exhibitors including Hewlett-Packard (HPQ), Research in Motion (RIMM) and Sony (SNE). A major theme this year: delivering high-definition entertainment to homes, cars and phones.

For tech journalists and industry insiders CES is half hell-hole, half wonderland, with the world’s coolest cell phones, cameras, HDTVs, game systems and in-car electronics spread over 1.8 million square feet of leg-cramping exhibit space. This is the show where many people got their first glimpses of advances like futuristic OLED displays, digital home theater and home automation systems. But it’s also a stage where tech execs make big promises that don’t amount to much.

At the other end of the spectrum is an event that draws just a few hundred people. At the end of January, some of the freshest new ideas in tech will be on display at DEMO, an invitation-only gathering outside Palm Springs. There, veteran tech analyst Chris Shipley stages the tech biz version of Survivor, where a closely guarded roster of innovative startups (and a few big companies) gets a few minutes to demonstrate a breakthrough new product or service in front of an elite audience of venture capitalists and corporate kingmakers.

Much of the DEMO fare isn’t for the mass market – you won’t see the next Nintendo Wii unveiled here. Instead, these are the technologies that Silicon Valley insiders often acquire or imitate, and incorporate into their own arsenals. (Intuit (INTU) a few weeks ago announced plans to buy former DEMO presenter Homestead Technologies for $170 million, and HP last year bought former DEMO presenter Bitfone for an undisclosed sum.)

So DEMO might not be big, but it’s hot. And if you really care about which way the tech industry is headed, it makes sense to pay attention to January’s little show, along with the San Francisco Applefest and the Las Vegas Gadgetfest.