Iomega’s Rev drives compete with portable hard drives from Seagate and Western Digital; EMC hopes to buy the company and turbocharge the brand. Image: Iomega

What happened to Iomega (IOM)?

It was a gravity-defying technology stock during its best run a decade ago. At its peak in 1996, the company’s nearly $6 billion valuation meant many investors were betting it would be the future of digital storage.

Iomega seemed to be at the right place at the right time; broadband connections and music downloads were not yet common, and few tech companies recognized that storage would be a growth market. Meanwhile Iomega’s proprietary Zip disks and Zip drives provided the capacity of a computer hard drive and the portability of a floppy disk, making it a snap to move chunky files like digital images or huge spreadsheets from one PC to another.

Microsoft Surface is a tabletop computer that’s controlled by physical touch instead of a mouse or keyboard. Image: Microsoft

Microsoft’s tabletop computer could appear in homes in three years or less, the executive in charge of its development said this week.

Since unveiling the Microsoft Surface product last year, the company has gotten plenty of feedback from businesses and enthusiasts who want to get their hands on the technology, said Tom Gibbons, corporate vice president of Microsoft’s (MSFT) Specialized Devices and Applications business. And Gibbons said he feels confident that the touch-based computer could be affordable enough for consumers in three years or less. “In the three-year time window, we absolutely see how to get there,” Gibbons said. “If we can beat that, we’ll try to beat that.”

Surface is a computer built into a coffee table, and its 30-inch screen is controlled by touch rather than by a mouse or keyboard. (The complex manufacturing, of course, makes it expensive — the commercial version will be priced between $5,000 and $10,000) Though the concept is similar to Apple’s (AAPL) touchscreen iPhone, the implementation of the technology is quite different. Surface works using digital cameras under the glass, which track movements above.

Lenovo’s critically acclaimed ThinkPad X300 laptop does without a hard drive. Image: Lenovo

While munching on a reuben at Birk’s, a steakhouse in Silicon Valley, Seagate (STX) CEO Bill Watkins is explaining why he’s not too worried about a these trendy new laptops that have everything but a hard drive.

On the surface, this would seem to be a big problem. Seagate, after all, is the world’s largest hard drive maker with expected sales of more than $3 billion this quarter – so Watkins likes to see his wares go into more gadgets, not fewer. It’s easy to see why he tends not to favor devices like Lenovo’s sleek ThinkPad X300, which is winning raves for its light weight and silent operation, and its 64-gigabyte flash storage drive.

Mint CEO Aaron Patzer isn’t itching to sell his online budgeting service, but a company like Microsoft would do well to buy it anyway.

No one’s said much about it, but there it was, plain as day, in Apple’s (AAPL) earnings call this week: Chief Financial Officer Peter Oppenheimer said the ‘A’ word.

Acquisitions.

When an analyst asked what Apple would do with more than $18 billion in cash it’s sitting on, Oppenheimer downplayed the possibility of a major stock buyback, and hinted that Apple could go shopping instead. “Our preference,” he said, “continues to be to maintain a strong balance sheet in order to preserve our flexibility to make strategic investments and/or acquisitions.”

Which is a fine segue to my piece in the latest issue of Fortune, which seeks to tackle the issue of what, exactly, Apple and others should do with their growing stacks of Benjamins. Among my recommendations: Apple should buy a green startup, Microsoft (MSFT) should buy Mint, and Google (GOOG) should buy TiVo (TIVO).

Though Apple normally doesn’t buy many companies, I suggest 2008 might be a good time for Jobs & Co. to throw some money around. (Same goes for Microsoft and Google, which do a lot more spending than Apple.)

Apple executives are fond of talking about seven years ago, the last time Wall Street seriously underestimated the company. Faced with an economic slowdown that saw his tech industry peers slashing staff and cutting projects, CEO Steve Jobs proclaimed that he and the rest of Apple would instead “innovate our way” out of the slump.

Jobs made good on that promise. Soon after, Apple (AAPL) unveiled the iTunes Store, the iPod took off, and … well, the rest is history.

This week, you can bet the true believers around Apple’s Cupertino headquarters are thinking back to 2001, while loading up on some suddenly discounted shares. Talk about an after-Christmas bargain: Apple stock is trading at about $140, 30 percent off its December 28 high of $202.96. That’s about the same place where Wall Street valued the stock six months ago, before it became clear that the new iPhone would sell nearly 4 million units in 200 days.

Last year’s iPhone introduction was an A+, with a beyond-cool gadget, new software and new services. So how did Apple (AAPL) score this year with its Macworld presentations? A slim laptop with Intel (INTC) inside won bonus points, but aside from that, CEO Steve Jobs had to rely on his top-notch presentation skills. This is how we graded his keynote announcements:

Flash-based laptops? Suped-up iPhones? The wait is over for Apple’s biggest announcements of the year.

The crowd at Macworld 2008 settles in for the Steve Jobs keynote. Photo: Jon Fortt

SAN FRANCISCO — The keynote has begun. There’s a Mac vs. PC commercial showing. PC is talking about what a bad year 2007 was, with all of Apple’s announcements including the iPhone. PC says 2008, though, will be a great year. “What are you going to do?” Mac asks. “I’m just going to copy everything you did in 2007.”

Steve Jobs walks onstage from the left.

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?

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.

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.