Once a driving force in the handheld market, Palm has found itself struggling for survival in recent years as its devices get eclipsed by smartphones from RIM, Nokia and Apple. There hasn’t been much innovation on Palm’s front for quite some time, but according to a report from BusinessWeek, the company is finally ready to unveil the long awaited and often delayed replacement for their ageing operating system at CES next month.

Details of new operating system – dubbed Nova – are still sketchy, but it is being said that Palm wants to position it between the media-rich iPhone and the work-oriented BlackBerry, where the company sees a gap. Apparently, the general idea is to create a platform that’s flexible enough to “support a wide range of customer desires.”

It won’t be easy for them to make a comeback in the smartphone market but initially Palm is aiming for a 2% share. In the end, however, it will all depend on third party developers’ support for the platform – after all, an operating system on a mobile device is only as good as the applications it can run.