SAN FRANCISCO -- Macworld, the largest trade show for Apple ( AAPL) enthusiasts, kicks off Monday as industry observers and investors eagerly anticipate the unveiling of new products.

Following tradition, that moment will come Tuesday when Apple CEO Steve Jobs takes the stage to deliver his highly anticipated keynote address.

Last year, Jobs showed off the iPhone to nearly 45,000 delegates in attendance. In 2006, he introduced the iMac desktop with an Intel processor and the Macbook Pro, a line of Mac notebooks. In 2005, the iPod shuffle and the tiny desktop computer, Mac Mini, made their debut.

Apple Fans, Brace for MacWorld Letdown

The product announcements have had a definite impact on Apple shares. Last year, the stock jumped 12% in the three days following Jobs' keynote address. That compared with a 10% increase for the same period in 2006 and just 1.2 % in 2005.

Whether the stock will get a nice bump this time around is unclear, given the unfavorable economic climate. Apple on Friday closed down $5.33, or 3%, to $172.69. The stock is down more than 8% after tasting a high of $198.85 on Dec. 26.

"It's not a cheap stock, but that said, they had an incredible holiday season and the expectations from Macworld are high," says Darren Chervitz, research director for Jacob Asset Management, which holds shares of Apple.

"We are not as comfortable with the name as in the past because of the macro environment and the stock's run last year, but the price has come down a bit and at some point we will be looking to add."

So far, Macworld-related Internet chatter has centered on the possibility of a slim laptop, a movie rental service and updates to Apple TV. That could be enough to get Apple fans going.

"Apple rarely disappoints in terms of announcing something special at Macworld," says Chervitz.

Analysts believe Apple needs to go after the small laptop market. "They need to have a truly competitive laptop device that is small, thin device at an attractive price," says Jack Gold, president and principal analyst of J. Gold Associates, a technology advisory and consulting firm.

Hold the Applause for Apple's Movie Rentals

"They have done pretty well last year, getting visibility around iPhone and increasing their market share against the PC. They need to do now more around mobility."

Trip Chowdhury, an analyst with independent research firm Global Equities Research, expects Apple will unveil a lightweight laptop, also known as the subnotebook, that could compete with products from the Sony ( SNE) Vaio range.

Other analysts expect the company to introduce a notebook with a screen between 8 inches to 12 inches without an optical drive (CD/DVD player), a standard feature of the current Macbook line of laptops.

The notebook could feature flash storage to improve battery life and reliability while reducing weight, says Shaw Wu, an analyst with independent American Technology Research, in research note.

A lightweight notebook could help Apple add to its recent gains in the computer operating system market.

Apple's share of that market has moved up steadily from 6.8% in November, 7.3% in December and as high as 8% in the days after the holiday shopping season, according to NetApplications, which tracks browsers and operating systems.

"A new, thin notebook will let Apple fly in a space that they haven't participated," says Chervitz. "There is a lot in terms of form factor, battery life, and the whole wow appeal that goes into making something like this successful, and Apple can use its software, hardware and design expertise to do it."

Keith Bachman, an analyst with BMO Capital, which makes a market in Apple shares, said that although the ultra-portables market will likely represent only 5% to 10% of the total notebook market in 2008, it will be one of the fastest-growing segments, with growth rates of 40% to 50%.

In his keynote, Jobs could also disclose if Apple has inked a deal with some major movie studios for downloads through its iTunes store. News reports in the last few weeks suggest Apple has partnered with Fox Studios, a division of News Corp. ( NWS), and Disney ( DIS) to offer video downloads.

Apple could also enhance features in the Apple TV, considered a disappointment in terms of customer adoption.

"Apple TV has two big shortcomings," says Wu, "the lack of a direct connection to the Internet for TV and movie content and lack of a TV tuner." He said Apple could announce some of these features at Macworld that will probably be released later this year.

Other product announcements could include a 3G iPhone, something that AT&T ( T) CEO, Randall Stephenson, has hinted at in the past.

There's no doubt that expectations run high, but Jobs, says Gold, may just end up beating them yet again.

"Apple is real good at keeping secrets," he says, "and Steve Jobs is pretty good at pulling rabbits out of his hat."

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