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Intel Plans for Future; Spy Planes Help U.S. Troops in Afghanistan; Old Wooden Pencil Gets New Competition

Aired September 14, 2002 - 13:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


ANNOUNCER: Today on NEXT@CNN, a peak at what the folks at Intel are thinking about for the coming years.
(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: Try this.

(END VIDEO CLIP)

ANNOUNCER: We'll see designs from fanciful custom computers to personal video players, some of which might be in your future.

Technology in the war against terrorism. We'll show you newly declassified pictures that show how spy planes are helping troops in Afghanistan.

And the old wooden pencil gets new competition.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: I like how it floats.

(END VIDEO CLIP)

ANNOUNCER: A product that puts more pen in the pencil. All that and more on NEXT.

JAMES HATTORI, HOST: Hi, everybody -- I'm James Hattori and welcome to NEXT@CNN -- this week from San Francisco's Golden Gate park.

We all know technology companies are being hit especially hard right now by the slumping economy. A new report by IBC predicting flat worldwide computer sales this year doesn't help things but some companies are looking to a brighter future.

I got a chance this week to see what computer chip maker Intel has up its sleeve in preparation for the next tech boom.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: The idea is to create an optical illusion to make it look like the box is empty.

HATTORI (voice-over): In fact, these playfully homemade computers, including this one made from an old waste basket, are far from empty -- they all have Intel inside.

DEAN LIOU: It has a G-force-4 (ph) video card and a P-4 (ph) processor -- 2.4 gigahertz. Fully functional PC.

HATTORI: Sounds pretty hot.

LIOU: No -- it runs cool.

HATTORI: Everything at this Intel developers' forum -- new laptops that fold into tablets, eye-catching 3-D graphics technologies and this new personal video player coming out next year ...

UNIDENTIFIED MALE: On the 20 gigabyte hard drive we can store about 70 hours of video.

HATTORI: ... are the kinds of things on which the giant chip maker is banking its future.

PAUL OTELLINI, PRESIDENT AND COO, INTEL: These products will deliver, I believe, the fuel for growth for reigniting the industry.

HATTORI: The industry -- facing computer sales as flat as a $10,000 plasma screen -- is even acknowledging that all of these high- tech gadgets are often too complicated and unwieldy.

ANDREW LIU, INTEL: We want the mainstream consumer to be able to just buy this stuff, bring it home and it works. And that's not the case today.

HATTORI: One answer -- a better plug and play experience.

DAN SALMONSEN: Select (UNINTELLIGIBLE) and you'll see it then does full motion, higher resolution video from the PC.

HATTORI: Getting your equipment to connect and interact simply so you can play video from your computer, on your TV or audio files on your stereo.

Another way to encourage more computer usage, Intel plans to include wireless capabilities on every chip it sells so you don't have to buy an add-on.

PAT GELSINGER, CTO, INTEL: Every platform, every mobile PC comes out of the shoot is able to immediately connect to wireless networks.

HATTORI: But connecting with the consumer is what drives the company's $4 billion a year research shoot in hopes of keeping Intel inside as many homes as possible.

GELSINGER: Some of the things that I thought might have been four or five years away -- the product guys get excited about it and voila -- it's a product a year or two from now.

(END VIDEOTAPE)

HATTORI: NASA has some big plans of its own for the future. A new space telescope that will do things the Hubble Telescope can't. The space agency announced this week the new telescope scheduled for launch in the year 2010 will be built by TRW and named for James Webb who headed NASA during its glory days in the '60s.

The Webb telescope will have a primary mirror twice as big as Hubble's and will study different wavelengths of light to learn more about how the very first galaxies formed.

It will also orbit much farther from Earth than the Hubble -- too far away for astronauts to make a service call if anything goes awry.

High tech weapons have helped U.S. and allied forces prevail in Afghanistan and one of the most impressive is the pilotless spy plane called the Predator.

Until now pictures taken from the Predator have been top secret but CNN has obtained the first declassified pictures that show how the Predator works in actual combat.

Senior Pentagon correspondent Jamie McIntyre has this exclusive report.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: That would be six miles. Let me know when you see the target area and I'll start the countdown.

JAMIE MCINTYRE, CNN SENIOR PENTAGON CORRESPONDENT (voice-over): These declassified pictures are thermal images transmitted by an unmanned spy plane as it loiters over a target in southern Afghanistan one night this past winter.

UNIDENTIFIED MALE: Do you have the two buildings insight? There's seems to be (UNINTELLIGIBLE) and a lot of vehicles in the surrounding area. Those are the only two buildings in the area. Do you see those?

UNIDENTIFIED MALE: Roger. Is it on the east side or the west side of (UNINTELLIGIBLE)?

MCINTYRE: This is the first combat footage from a Predator drone to be released by the Pentagon and it has been declassified at the request of CNN.

UNIDENTIFIED MALE: You have a square building and a rectangular building to the northwest.

UNIDENTIFIED MALE: And on the big square building there's a square -- rectangular (UNINTELLIGIBLE) next to it. Do you see that?

UNIDENTIFIED MALE: Yes.

MCINTYRE: The voices on the tape are of the crew of an AC-130 gunship, which will use its highly accurate side-mounted 105 millimeter Hallitzer (ph) to take out Taliban vehicles and fighters.

UNIDENTIFIED MALE: There is a mosque. Do not engage the mosque.

UNIDENTIFIED MALE: Roger.

UNIDENTIFIED MALE: The square building is the mosque or is it ...

UNIDENTIFIED MALE: The rectangle -- the rectangle.

UNIDENTIFIED MALE: The rectangular building is the mosque.

UNIDENTIFIED MALE: Roger that.

MCINTYRE: When the AC-130 gunship arrives on the scene, the predator is already providing streaming video directly to the AC-130 crew along with verbal guidance from the predator operator on the ground.

UNIDENTIFIED MALE: OK -- (UNINTELLIGIBLE) three vehicles pointed east west. Do you see those?

UNIDENTIFIED MALE: Yes.

UNIDENTIFIED MALE: Yes, we do.

UNIDENTIFIED MALE: We've got a vehicle moving out.

UNIDENTIFIED MALE: One of the vehicles is moving right now.

MCINTYRE: To the Predator's infrared camera the warm bodies of individuals show up as white shapes and they can be seen scrambling as the AC-130 circles overhead.

UNIDENTIFIED MALE: One of the vehicles is moving right now.

UNIDENTIFIED MALE: You are clear to engage it.

UNIDENTIFIED MALE: Let's go.

UNIDENTIFIED MALE: (UNINTELLIGIBLE) fire.

UNIDENTIFIED MALE: Two three armed.

UNIDENTIFIED MALE: (UNINTELLIGIBLE)

UNIDENTIFIED MALE: Good shot.

UNIDENTIFIED MALE: (UNINTELLIGIBLE) secondary.

MCINTYRE: The result is a deadly accurate fusillade of artillery shells.

UNIDENTIFIED MALE: We've got people coming out of the mosque right now.

UNIDENTIFIED MALE: (UNINTELLIGIBLE) ready.

UNIDENTIFIED MALE: (UNINTELLIGIBLE) vehicles.

UNIDENTIFIED MALE: (UNINTELLIGIBLE)

UNIDENTIFIED MALE: (UNINTELLIGIBLE)

MCINTYRE (on camera): The U.S. military has used unmanned spy planes for years but it was only in the Afghanistan war. It was able to get the live video feed directly to pilots for real-time targeting.

It is that capability that makes the Predator an indispensable tool in modern warfare especially if the U.S. goes to war against Iraq where intelligence will be the key to finding and perhaps killing Saddam Hussein.

(END VIDEOTAPE)

ANNOUNCER: Still ahead on NEXT@CNN -- downloading major motion pictures off the Internet is nothing new, but downloading them legally is. We'll tell you where to click.

Also ahead -- the future is looking brighter for sea turtles -- find out why.

(COMMERCIAL BREAK)

HATTORI: Europe's new currency may be good for the regional economy, but a pocketful of the new coins could be harmful to your health. It seems some of the euro coins have been causing skin irritations to people who are allergic to nickel.

Scientists at the University of Zurich think they know why. The one and two euro coins are made with a ring of one metallic alloy surrounding a central core of another alloy.

According to research published in the journal, "Nature," when the coins are exposed to sweaty hands, they generate a tiny electrical charge which makes both metals corrode faster than they would by themselves.

The euros went into circulation in much of Europe starting the first of this year.

You can now download some of the biggest box office hits legally and you won't need any euros or dollars or any currency. OK -- you will need a credit card. Here's Daniel Sieberg to explain.

(BEGIN VIDEOTAPE)

DANIEL SIEBERG, CNN CORRESPONDENT: The next time you want to see a major movie you can bypass the video rental store and head straight for your computer. Warner Brothers is offering "Harry Potter and the Sorcerer's Stone" and some of its other big named films for download over the Internet at cinemanow.com.

CinemaNow has been up since 1999 but maybe offered lower budget or independent films. "Harry" is perhaps the most well-known film offered under this partnership, which is planned to last at least until the end of the year.

People have been able to stream for awhile now but this is the first time that major motion picture films can be streamed or downloaded. But there are limitations. Here's how it works.

Starting at the home page for cinemanow.com there are a number of different categories. Let's choose the Family Channel and then select "Harry Potter." Once you find the film you're after you can watch the trailer or download the movie.

The faster the computer, the faster it will download and the faster you can watch the movie. But it will still take awhile even with a high speed connection. You'll also need to put in your credit card information.

For a cost of $3.99 new releases can be viewed for a period of 24 hours. After that the Windows media files essentially lock up. Older movies will set you back about $2.99.

Now besides that comfortable chair, you're going to need some patience. Files this size will take at least a couple of hours to download onto your computer, however, that time is not included in the 24 hour window.

And if you want to preview before you buy, you can also click on the trailers and watch those as well.

Warner Brothers, a unit of CNN's parent, AOL/Time Warner, is the first major studio to partner with CinemaNow. Another online movie service called movielink.com will provide CinemaNow with some competition in the coming months.

Movielink is a joint venture of five major studios and it's expected to launch by the end of the year.

But for now cinemanow.com is the only place you can go to legally download big motion picture films.

A word of caution to parents though -- there is a section at cinemanow.com that features adult titles so you may want to be careful with your kids.

(END VIDEO TAPE)

HATTORI: No doubt getting movies over the Net is the wave of the future and, of course, Microsoft wants to ride that wave. It's just announced a new version of its media player software.

Now you might think that big time Hollywood directors would be unhappy over a new and improved way to download movies from the Web but one director of titanic proportions apparently isn't too worried as Renay San Miguel reports.

(BEGIN VIDEOTAPE)

RENAY SAN MIGUEL, CNN CORRESPONDENT (voice-over): You didn't have to stand in line to enjoy the summer's two biggest movies. Both "Spider-Man" and "Star Wars: Attack of the Clones" were pirated onto the Internet the very weekends they hit theaters.

So what does Director James Cameron, Oscar winner for "Titanic," think about that?

JAMES CAMERON, DIRECTOR: You mentioned two examples of films that were the highest grossing films of the year. So clearly their business was not severely impacted by it and, in fact, it may have generated even more interest.

SAN MIGUEL: But Cameron is aware of the titanic struggle going on between Hollywood and technology companies like Microsoft. The issue is digital rights management or DRM. Movie and TV studios don't want to get Napster-ized like the record companies.

They don't want to see copyrighted movies and TV shows floating around the Internet for free, as is the case with music files thanks to peer to peer networks like Napster, Morpheus and Caza (ph).

CAMERON: Otherwise we'll have a situation like what happened with the peer to peer problems in the music industry and there will be a loss of revenue in the film industry and then we won't be able to create the magic that we have in the past.

SAN MIGUEL: Well, if that's the way Cameron feels, why is he joining Microsoft chairman Bill Gates in touting the benefits of the new Windows Media Player 9? That's Microsoft's multimedia software which let's you download music and video onto your computer from the Internet.

CAMERON: Bill's come down to Hollywood to make this announcement and that's a first. And he's saying, "Let's be partners in this. Let's figure this out so it's done sanely."

BILL GATES, CHAIRMAN, MICROSOFT: There's a lot that we need to work on in terms of education -- making it easy to license music and videos legitimately. And I'm pleased at the level of attention and the kind of dialogue between our world and the Hollywood world is at a new level. And I think these are solvable problems.

SAN MIGUEL: Another potential problem -- later this year Microsoft will release software that will let you digitally record TV shows onto your computer's hard drive. But Bill Gates says that problem is already solved.

GATES: Actually we've made it so that you can't take the videos you record and e-mail those off to other people. And that's because of the rights issues involved. And if you're mailing within from one of your own PCs to another one of your own PCs, we will in the future make that possible. But we don't allow the distribution that's beyond the rights that you have.

SAN MIGUEL: And that may indeed be music to Hollywood's ears.

(END VIDEOTAPE)

HATTORI: If you made a movie about the hawksbill turtle, the storyline would not be terribly encouraging. Human demands for tortuous shell jewelry has put the hawksbill on the endangered species list. But now, as Gary Strieker reports, a decision by Cuba could give the turtles' real life story a happier ending.

(BEGIN VIDEOTAPE)

GARY STRIEKER, CNN CORRESPONDENT (voice-over): The hawksbill turtle is widely found in tropical oceans but it is classed as an endangered species under a treaty that bans all international trade in the turtles or any parts of them.

And conservationists are welcoming a recent decision by Cuba to withdraw its request to export more than eight tons of hawksbill shells like these.

SARAH TYACK: We're obviously extremely pleased that Cuba has withdrawn its proposal because this eliminates the threat that a legalized international trade would pose to this species.

STRIEKER: Wildlife scientists say many hawksbill populations were seriously depleted before protection under the treaty. Fishermen hunted the turtles for their shells -- material long used by craftsmen to make jewelry, combs, eyeglass frames and works of art.

Craftsmen argue some hawksbill populations are not endangered and that sustainable harvesting of turtles in selected areas will actually encourage people to protect them.

That's why Japan was backing Cuba's request for an exception to the ban on tortuous shell trade. Cuba wanted to sell its stockpile of shells to eager Japanese buyers -- keeping this ancient craft alive and these people employed for a few more years.

But for now Cuba has backed off under growing pressure from conservationists who say only a complete moratorium on tortuous shell trade will allow hawksbills to recover worldwide. They claim any legalized sales create a cover for illegal trade.

TYACK: Once you give permission to sell this product on the international market you're merely creating a demand. It's similar to the ivory stockpiles in southern Africa at the moment.

STRIEKER: Five southern African nations once permitted to sell their stockpiles of elephant ivory to Japan for a carving industry that's also running short on raw materials.

With tortuous shell now off the agenda elephant ivory will once again be the major wildlife trade issue at the next treaty conference in Chile later this year.

(END VIDEOTAPE) ANNOUNCER: When NEXT@CNN returns -- if you have a fondness for foam, have we got a Web site for you.

Also coming up -- what do these doggy barks really mean? A Japanese company says it's invented a gadget that will tell you.

(COMMERCIAL BREAK)

HATTORI: Trivia time here on NEXT. What do forest fires have to do with spontaneous displays of audience exuberance at sporting events? I knew you were asking. Well, that's what researchers at the University of Hungary were wondering as well so they studied the wave -- the phenomenon at sporting arenas -- fans leaping to their feet hands in the air one section after another.

Their conclusion -- it takes only a few dozen fans to trigger the wave and, once started, the wave rolls in a clockwise direction at about 40 feet or 20 seats per second. How do they know this, you ask? Well, they say they use models developed to study the spread of forest fires and the spread of electrical impulses in heart tissue.

The Hungarian team says similar models could be used to study crowd control and behavior during riots.

The research was published in the British journal, "Nature."

The research said nothing about whether drinking beer contributes to the wave phenomenon. We have our suspicions about that.

Now just as there is sports talk on the radio, fans of lagers and ales have their own outlet to pop open their views. Bruce Burkhardt got a six pack full for this week's "Nothin' but Net."

(BEGIN VIDEOTAPE)

BRUCE BURKHARDT, CNN CORRESPONDENT (voice-over): Beer and opinions tend to go together. Next time you're out just ask someone.

UNIDENTIFIED MALE: I like the nice coffee flavor to it.

UNIDENTIFIED MALE: We're drinking Irish Guinness.

UNIDENTIFIED MALE: Good Scottish ale.

UNIDENTIFIED MALE: Good old fashioned American beer is OK with me, too.

BURKHARDT: But if you're at home and feel like shooting the breeze about beer, check out beeradvocate.com.

TODD ALSTROM, BEERADVOCATE.COM: It's a site dedicated to beer. It's built by people who love beer. And a lot of people get on and give their opinions about beer.

BURKHARDT: About a lot of different kinds of beer, in fact. Beeradvocate.com's visitors have posted ratings and reviews of almost 6,000 different beers. Who knew there were so many beers in the world?

UNIDENTIFIED MALE: Pete's makes a good porter. It's a good micro brewed American one. Bert Rance (ph) is one -- a bunch of German breweries make some good porters.

BURKHARDT: OK -- who knew besides this guy?

ALSTROM: Go to one of the search engines and type in "beer" for Google, for instance, and you'll get near seven million results for just the word "beer."

We do have a true community on beeradvocate.com because everyone is so open to share knowledge and help others out.

UNIDENTIFIED MALE: Yeah -- the users are really definitely a part of the site -- perhaps more than just a part of the site. They really ...

UNIDENTIFIED MALE: They are the site

UNIDENTIFIED MALE: ... they are the site.

BURKHARDT: After you rate and review your favorite or least favorite brew you can stop by the discussion forum to talk to fellow Beer Advocate users about all things beer. Regional beers are a favorite topic.

UNIDENTIFIED MALE: You're looking at people that want to travel to different areas, people looking for different beers in their area.

BURKHARDT: In fact, the subject of finding the best local brews comes up so often, the Alstrom brothers created a special section of the Web site called BeerFly.

ALSTROM: Which is great for travelers -- they can find out the best breweries in a certain area that they might be going to, the best places to have a beer. They can also hook up with other users within that area and check out beer events coming to that area as well.

BURKHARDT: And you just know once those beer drinkers get together ...

UNIDENTIFIED MALE: It's really thick. It's got a bold flavor. It's great.

UNIDENTIFIED MALE: I agree.

UNIDENTIFIED MALE: I drank Budweiser in college when I didn't have any money.

BURKHARDT: And so on and so on. I'm Bruce Burkhardt and that's "Nothin' but Net."

(END VIDEOTAPE)

HATTORI: Well, you might have had a brewski or two if your dog starts barking and you actually understand what he's trying to say or you might have a new gadget called Bow Lingual. Andrew Brown reports from Hong Kong.

(BEGIN VIDEOTAPE)

ANDREW BROWN, CNN CORRESPONDENT (voice-over): Bow Lingual analyzes barking sounds that are picked up by a special microphone. It can be fixed to a dog's collar or you could try dangling the mike near a canine's mouth and get a reading that way.

Don't be fooled by dogs that look aggressive. Experts say they might just be having fun. And this new product apparently helps us understand their complex emotions -- ask Ray Jones, the man who's marketing Bow Lingual in Hong Kong.

RAY JONES: This means "I'm happy."

BROWN: No surprise there but what about ...

JONES: Happy.

BROWN: Bow Lingual is made by the Japanese company Tikaro (ph) that claims through painstaking research to have matched different sounds with a dog's emotional state. Once there's a positive match the screen advises the user what the dog's feeling.

These feelings fall into several broad categories -- happy dog, sad dog, frustrated dog and dogs that want something.

UNIDENTIFIED FEMALE: I'd buy it. I think it would be cool to find out what she really wants.

BROWN: Can you make it bark?

UNIDENTIFIED MALE: Make it bark. Woof! Woof! Woof!

BROWN: Dogs just aren't buying this technology and at nearly 200 U.S. dollars some consumers aren't either.

UNIDENTIFIED MALE: $200 U.S. -- that's expensive.

BROWN: Yeah. Would you buy it?

UNIDENTIFIED MALE: No -- of course not.

BROWN: But what if you learned that using Bow Lingual a dog can actually give its owner advice?

UNIDENTIFIED MALE: When you make a mistake once and you hear a bark. Don't make this mistake again.

BROWN: Just imagine what power the presidential pets Barney and Spot could wield if Bow Lingual makes it all the way to the White House. It could be the start of a ruff-olution.

(END VIDEOTAPE) HATTORI: Bow Lingual will launch in Japan and Hong Kong this month. An English version is in the works. The question is -- can you use an English version on a Japanese dog? I don't know. I do know it's time for a break and then a look at the latest headlines from the CNN newsroom. We'll be back in a few minutes.

ANNOUNCER: Coming up on NEXT@CNN -- as American tech workers feel the economic pinch sticky questions surround a program that gives special status to highly skilled foreigners looking for work in the U.S. Plus, R2D2, liquid pencils and more. Stay with us.

(COMMERCIAL BREAK)

HATTORI: Welcome back to NEXT@CNN from San Francisco's Golden Gate Park.

It's no secret the economy has really hurt the job market in Silicon Valley. And it's raising new scrutiny for highly skilled foreign workers. The federal H1-B visa program grants them special immigration status. But critics say the program is taking jobs away from American workers.

(BEGIN VIDEOTAPE)

HATTORI (voice-over): These days, computer programmer Pete Bennett is building boats for his kids instead of software.

PETE BENNETT, COMPUTER PROGRAMMER: Well, I was a cabinetmaker for 15 years.

HATTORI: But after more than a decade in high tech, this year Bennett has worked on just one software project so far, a victim of the economic slowdown and, he says, an immigration program that's making the job market even worst.

BENNETT: The American citizens are getting hurt. The H1-B workers are getting hurt. And something needs to be done to straighten this thing out -- and quit.

HATTORI: Bennett believes the federal H1-B visa program, which allows nearly 200,000 skilled workers a year into the U.S., is unnecessary and being abused.

HATTORI (on camera): Bottom line, are H1-B visa holders taking jobs that American citizens could be filling?

BENNETT: That's the general consensus among my peers, and myself.

HATTORI: He's not alone. An organization representing nearly 250,000 high-tech professionals has written to Congress. They want to know why Americans are getting laid off while workers from abroad continue to work. The H1-B program was supposed to give skilled overseas workers jobs when qualified Americans cannot be found. The visas were initially capped at 65,000 in 1998, but Congress upped it to 195,000 last year. HATTORI: In fact, perhaps because of the U.S. economic slump, H1-B applications are down dramatically, 48 percent fewer so far this year compared to last. But critics say the decline is not keeping pace with layoffs here in the U.S.

Norm Matloff is a professor at the University of California at Davis, who has studied hiring practices at high-tech companies.

NORM MATLOFF, UNIV. OF CALIFORNIA-DAVIS: What Congress ought to do is just cancel the whole H1-B program. And in its place put a very small program with very strong protections, and without the loopholes they have now.

HATTORI: Loopholes that, critics say, for example, let companies hire H1-B visa workers at lesser paying positions than the jobs they actually perform.

MATLOFF: There is tailoring the job requirements, so that only the foreign national -- you know, that's the only person on the whole planet that would qualify because you've deliberately set it up that way.

HATTORI: Mahesh Nagaranjaiah, who heads up a Silicon Valley organization that counsels many H1-B visa holders says they're missing the bigger picture -- U.S. jobs are being exported anyway.

MAHESH MAGARAJAIAH, H1-B VISA ADVOCATE: I don't think American companies need to find loopholes in the H1-B programs, but they are sending work back to other countries like India, Russia, Israel, China, and other places, where the work can be done at a lot cheaper cost.

HATTORI: The industry also cites a dwindling pool of qualified graduates in U.S. schools.

HARRIS MILLER, INFORMATION TECH. ASSN. OF AMERICA: Half of all graduate students in the math and science programs are foreign students. When a company is looking for the best and brightest, particularly people with advanced degrees, master degrees and Ph.D.s, frequently, many of those candidates are born abroad.

BENNETT: You got any friends at Technical that have been laid off...

HATTORI: Still, that hasn't stopped Pete Bennett who takes his anti-H1-B campaign anywhere people will listen in hopes of saving any jobs he can.

BENNETT: These people are deserving American citizens, and they deserve the opportunity to be employed. And it's a tragedy the way the jobs have been manipulated.

(END VIDEOTAPE)

HATTORI: Now you might get the idea that every software programmer in the world wants to work in Silicon Valley. But some of the high-tech workers and entrepreneurs who moved from Asia to California are heading home. Kristie Lu Stout reports on the two-way flow of talent across the Pacific.

(BEGIN VIDEOTAPE)

KRISTIE LU STOUT, CNN CORRESPONDENT (voice-over): Today, co-head Frisbee, tomorrow the world. For Stanford senior Sherman Li all eyes are on Asia.

SHERMAN LI, STANFORD UNIV. STUDENT: I've worked in Asia before and I definitely look forward to it. Hong Kong's my favorite city and I love being in Asia. I love the people there. And I love the environment.

STOUT: Li is bent on a career that will take him back to his parent's homeland, a path he's forging now as the president of Stanford's Asia-Pacific Student Entrepreneurship Society.

LI: We want to bring something from what we learned here by studying at Stanford University in Silicon Valley back to Asia, and be able to connect what is going to be the largest market in the future.

STOUT: For today's aspiring entrepreneurs, a home base in Silicon Valley is simply not enough. They want to be where the action is, whether it be Asia, the U.S., or both. It's an ironic twist of the so-called brain drain as Asian immigrants and their children slowly return to the region.

ANNALEE SAXENIAN, UNIV. OF CALIFORNIA-BERKELEY: What you see now is people who now understand the Silicon Valley business model, how to run a company, how to raise capital, going back to their home countries and building on the best of both places, the technology and the management from the U.S., the access to the markets, the culture and the linguistic know-how in other countries.

STOUT: It's a phenomenon Saxenian calls brain circulation, the two-way flow of talent and capital that will reshape the economic landscape in both parts of the world. A critical shift closely watched by the Indus entrepreneurs or TIA (ph), and Indu-American group, working for India's high-tech upgrade.

SRIDAR IYENGAR, THE INDUS ENTREPRENEUR: Most companies in India, which were created by U.S. companies, if you look at how they started there was an Indian who was a champion within that company in the U.S., who -- both for personal and business reasons -- was able to convince people in that organization, saying, hey, why don't we go do something in India. And by the way, I will go and run it for you, That has already happened. I did this for my own firm. So, it will happen hundreds, if not a thousand times, already.

STOUT: The traffic talent has increased between the U.S. and India, especially as more Indian professionals set up subsidiaries abroad. But how is this economic web changing the concept of identity?

SAXENIAN: It's complicated because often these people say, we're born in China, or Taiwan, or India, but they have spent most of their adult life in the U.S., raising their children in the U.S. so they're really people who have transnational identities, or you know, they identify with both places.

STOUT: Sherman Li is not quite ready for a permanent move to China, but his heritage has turned into a business asset he refuses to ignore.

LI: Even though I identify myself to be American first, but there's no doubt I am Asian. If you look at me, I am Asian. And I believe that's why I have a vested interest in helping the Asia- Pacific Rim.

STOUT: Now, and long after those carefree days of Frisbee in the park.

(END VIDEOTAPE)

ANNOUNCER: Up next, a visit with a cute but feisty, denizen from a galaxy far away.

(COMMERCIAL BREAK)

HATTORI: If you're a hopeless "Star Wars" fan and have always longed for your own personal droid from a galaxy far, far away, well, the force -- well, a commercial force, has answered your prayers. Daniel Sieberg has this week's "Technofile."

(BEGIN VIDEOTAPE)

SIEBERG: Well, who could forget R2-D2 from the different "Star Wars" films? Helped save the galaxy on more than a few occasions and was a faithful companion for C-3PO.

Well, I'm going to stand in today for C-3PO, and interact with this much smaller version of R2-D2 from Hasbro Entertainment. He's a robot, and offers a number of different features that people might find quite high-tech, including infrared sensors and the ability to respond to about 40 different voice commands.

However, just like the actual R2-D2, he's programmed to be a little temperamental. So, we'll see if he cooperates with us today.

SIEBERG: Hey, R2?

Play message.

ROBOT: This is our most desperate hour. Help me, Obi-Wan Kanobi. You're my only hope.

SIEBERG: A very familiar message to people who are fans of the "Star Wars" films.

Hey, R2?

Do you remember Darth Vader? Now, see if he doesn't do what you've asked him to do, you can also reset him in a different way that's a little unorthodox. But if you hit him on the head like that it resets everything in him so he can go back to listening to your commands.

I'm sorry, R2.

He can also sense where different objects are through these infrared sensors as he moves around and plays different games.

Hey, R2. Game mode. Light tag.

He's counting to 10 right now. Once he's finished, he's going move around the room looking for different heated objects. When he sees them, he's going to tell you he's spotted you.

He found me already.

R2 also has a small, retractable arm that allows him to carry a small can or cup. I'm going to put something in there now. He is capable of bringing it to you if you command him to, however, you still need to put it in his hand for him.

Hey, R2, game mode. Dance program.

Of course, R2 works better when he's on a flat surface like this floor that we're on now. And he'll be moving into stores this month. Retails for about $100 and you can pre-order him online. He's got his own Web site at R2droidfactory.com.

(END VIDEOTAPE)

HATTORI: If you missed some of R2's beeps and whistles, or want more information on this week's program, check out our Web site, cnn.com/next.

Now, some of you cynics out there probably are thinking products like R2-D2 are a little more than an entertaining form of advertising. And you may well be right. Well, coming up NEXT, we'll show you other ways advertisers are trying to keep you entertained. Stay with us.

(COMMERCIAL BREAK)

HATTORI: People spend a lot of time and energy going out of their way to avoid advertising, using programs to nuke web banners and pop-ups and VCRs and digital video recorder to zip through commercials. Some advertisers are hoping a marriage of TV commercials and the Internet will help get their message across. Here's Renay San Miguel.

(BEGIN VIDEOTAPE)

SAN MIGUEL (voice-over): You may be tired of advertising popping up in every aspect of your life, but a lot of people actually seek out certain ads. Sites like Ads.com and Adcritic.com that feature streaming TV commercials, are gaining popularity. Some ad campaigns are so entertaining they attract a fan following and these sites provide a place to watch.

WALLACE SNYDER, PRES. & CEO, AMERICAN AD ASSN.: Advertising's job is to get out information and to persuade consumers to purchase. So, where it's headed is very effective vehicles for doing that. It's got to really capture the attention of the consumer, entertain the consumer, and at the same time, sell the product.

SAN MIGUEL: The online ad market has had its difficulties. Still, experts say the on-demand nature of the web may be perfect for ads that were successful on TV.

PROF. DEBORAH MORRISON, DEPT. OF ADVERTISING, UNIV. OF TEXAS: As with any creative endeavor, advertising should be breaking rules all the time. There should be ways -- and we see that. The other night we was it on "American Idol", when Ford showed that the kids who are on "American Idol" could be part of the advertising. Now, that's breaking new ground, that's trying some new ideas.

SAN MIGUEL: New ideas haven't been enough to help in a struggling economy, but advertisers aren't giving up yet. Companies spent over $8 billion in the year 2000 to advertise online, according to PricewaterhouseCoopers. Even though research shows that Internet users only respond to about 5 percent of online ads.

However, if a successful formula is discovered, the potential audience is huge, and growing, with more than 174 million Americans already online. And Nielson Ratings show the average user spends almost 20 hours online each week.

BMW is trying a new formula. The automaker is using the web to blur the lines between ads and entertainment. BMWfilms.com features short movies by top directors like Ang Lee and Guy Ritchey flashing BMW cars, of course.

But what's the reward for web surfers who seek out advertising?

MORRISON: For consumers, I think they offer a couple things. They offer more chance to hear the story, more chance to get the details of those things that they really enjoy, and have found themselves connected to. It's telling a story, it's creating a connection with that brand. And that is something that, certainly, the Internet can provide in a most magical way, if we want to look at it from a Harry Potter point of view.

SAN MIGUEL: So do commercials as online entertainment really work? The advertising industry is hoping that the growing popularity of these "adver-tainment" sites may be a clue.

(END VIDEOTAPE)

ANNOUNCER: Still ahead, do old-fashioned pencils need to get the lead out? Check out the unleaded version, when we come back.

(COMMERCIAL BREAK)

HATTORI: Finally today, a story from our "Better Living Through Science" file. We all know that pencils are great, because you can erase what you write. Then they get dull. Then you have to find a sharpener. Then what do you do with all those annoying shavings? Leave it to our Jeanne Moos to find a new fangled pencil that solves all those problems.

(BEGIN VIDEOTAPE)

JEANNE MOOS, CNN CORRESPONDENT (voice-over): Most of us started out as pencil pushers, yellow ones, stubby ones, perfect for filling circles, sticking behind your ear. Some of us never grew out of it.

But knock on wood. Want to try that first? The wood pencil has a challenger.

BARRY ROSENBAUM, PRES. STYLIST WRITING INSTRUMENT CO.: It's a combination between a ballpoint pen and a pencil.

MOOS: Revolutionary liquid lead. Actually, it's not really lead, but a nontoxic solution that includes graphite.

UNIDENTIFIED MALE: Wow, feels like a pen.

MOOS: But unlike a pen, it erases. Unlike a pencil, it never needs this.

The makers of the ballpoint pencil, a company called Stylus, even made it yellow to resemble a regular pencil. It qualifies as a No. 2.

MOOS (on camera): I mean, you think this, could knock off this?

ROSENBAUM: We think you'll find this item, in about 30, 40 years on display in a museum, not in a store like this.

MOOS: Really?

(voice-over): Don't scrap that pencil sharpener yet.

UNIDENTIFIED MALE: It's a classic.

MOOS: So, you prefer this?

UNIDENTIFIED MALE: I prefer the classic.

MOOS: We took the challenger to the street, pitting it against a regular pencil. Some praised the ballpoint.

UNIDENTIFIED MALE: I like how it flows.

UNIDENTIFIED MALE: Aces.

MOOS: So, how do you like it?

UNIDENTIFIED BOY: Cool.

MOOS: But many were unimpressed.

UNIDENTIFIED MALE: Scratchy.

UNIDENTIFIED FEMALE: I'm like, not into all this high-tech stuff.

UNIDENTIFIED MALE: I give it a two out of 10.

MOOS: This woman had picked up a pack of ballpoint pencils at Staples, until we gave her one to test.

UNIDENTIFIED FEMALE: It's almost like a pen running out of ink. I am so glad I tried these. I'm going to put it back.

MOOS: She dropped the new pencils like lead. Sometimes what folks wrote to test the pencils ...

UNIDENTIFIED MALE: Sex, sex --

MOOS: ...was more revealing than which pencil won.

MOOS: Meg, I love you?

UNIDENTIFIED MALE: Just got married.

MOOS: The ballpoint pencils sell for three for $1.99, same price as a dozen regular pencils.

UNIDENTIFIED FEMALE: Oh, no, wait a minute. This is a left- handed. Yours is a left-handed pencil.

MOOS: Never fear, a right-handed pencil merely displays the printing right-side up held in the right hand, upside down held in the left. Pencils come in handy for releasing anger as demonstrated by "Goldfinger". The ballpoint requires a little more muscle.

MOOS (on camera): OK, which one do you like better?

The second one?

UNIDENTIFIED CHILD: Both.

MOOS: Oh, both?

At first this woman seemed silently positive about the ballpoint. Look, she's telling us. Then she picked up the regular pencil.

"I like this better."

UNIDENTIFIED FEMALE: You got it.

MOOS: The moral, don't write off the pencil just yet.

(END VIDEOTAPE)

HATTORI: Well, there's a subtle cue. You guessed it, we've about hit the end of this week's program. But before we go, here's some of what's coming up on NEXT. Most students are probably forbidden from firing up their Playstations until all their homework is finished. But these students are using their Playstations for homework. Is this a great country or what?

And this cockroach is not walking the treadmill for his health. Researchers are getting some bio-inspiration, learning a thing or two from animals to help develop new kinds of robots.

That and a lot more coming up on NEXT. Until then, let us hear from you. You can send us an e-mail. Our address is next@cnn.com.

Thanks so much for joining us this week. For all of us on this high-tech beat, I'm James Hattori in San Francisco's Golden Gate Park. We'll see you next time.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com



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