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QUEST MEANS BUSINESS

Nokia Scores Rare Win Over Apple; Lagarde Favored to Become New IMF Director

Aired June 14, 2011 - 14:00:00   ET

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


RICHARD QUEST, HOST, QUEST MEANS BUSINESS: Dial V for victory. Nokia scores a rare win over Apple.

Age old problem, old age and it stops Stanley Fischer's IMF bid.

And blue sky thinking, Airbus up in the clouds.

I'm Richard Quest. I mean business.

Good evening.

In a mobile minefield of tit for tat legal action, Nokia has emerged victorious. It's patent victory against Apple has made it clear. One of Nokia's biggest rivals was using its ideas without paying for them or licensing the rights. Apple is the clear loser today and the settlement over software and touch screen technology. All lawsuits between the two companies have now been dropped and a sizable wad of money will be heading in Nokia's direction.

Not only-well, as you will see in the library-how they are going to deal with this. Not only will there be a one-off payment to account for what's happened before, but there will be ongoing royalties. And as I say in response, or respect, of the fact that Nokia and Apple have now settled their patent dispute, all other litigation has been dropped.

But a victory for Nokia, nonetheless, and not surprisingly the share price for Nokia is up some 1.5 percent. Nokia, of course, down 40 percent for the best part of a year. So the share-this 1.5 is hardly going to get you a roaring in the aisles, but it is better than otherwise.

The minefield of the issues, of the complexity of phone and converging devices, cameras, music players, Internet. The issue basically becomes down to this. Different manufacturers have patented their own bits of information, Internet protocols, information proprietary rights. But somebody else wants to use it, so the quid-pro-quo begins. And that is why you end up with this extremely difficult and different element of paying your rivals into different forms of-ah, ah, of technology.

It is estimated by one analyst that patented technology some 15 to 20 percent of the phone price. Now Nomura also says that Nokia will get one to two-look at this. This is the sort of complexity of what takes place. You have got Apple paying Microsoft, to Samsung, to Kodak to Research In Motion, to Motorola. And all of these companies, at some point, are suing the others. Or as you can see here, they are counter-suing the others, claiming different patents have been-have been at some point, infringed, and they are rightly owed some form of technology payment.

Nomura technology specialist, Richard Windsor, joins me now.

I mean, that-the graph is gone.

RICHARD WINDSOR, NOMURA, TECHNOLOGY SPECIALIST: Yes.

QUEST: We'll bring it back in just a second. Let's start with the Nokia, the Nokia decision-they won?

WINDSOR: Yes. They won. I mean, they won because they were chasing Apple for royalties based on patents that Apple had absolutely no choice to but use in order to make a 3G device. There was-that is fairly clear. And the precedent behind that was also very well established.

QUEST: But why did they think they were going to get away with it, I suppose. I mean, Nokia has the touch screen patent that Apple was using.

WINDSOR: It is not actually that technology that I suspect that suspect Nokia has actually won on. It is probably the radio technology that Nokia has won on.

QUEST: All right.

WINDSOR: That technology is actually included in the chip that Apple bought from Infineon. So it is quite possible that Apple was seeking some kind of pass through by Infineon.

QUEST: Richard if we look at this behind us, that we were talking about earlier. You see the phenomenal complexity of Kodak, of Research In Motion, everybody is suing everybody else. What is behind all of this though? I mean, I thought, to some extent that these companies had their own technologies. So why are they all suing each other?

WINDSOR: Well, because the reason why I suspect this is come to a head now is because Apple have come up with the winning small phone design. And what they have designed is a user experience that users actually want to use. If you ask any consumer survey they will say I'll have an iPhone as long as I can afford it.

QUEST: So, when we see another phone that has something similar or operates in a similar way, it is a "me too", but the company is probably paying somebody else for the right to have a "me too".

WINDSOR: In many ways, and what will happen here is that Apple said that it has filed a number of patents on the user interface and will try and block people from copying its user interface, which has proved so popular, in order to maintain market share for itself.

QUEST: Now, I had looked at a couple of Apple patents on line, and I got a good look. They are exceptionally complicated things.

WINDSOR: They are.

QUEST: These things, aren't they?

WINDSOR: They are.

QUEST: The devil is very much in the minutia.

WINDSOR: Yes, and what it actually comes down to is usually, if both parties have patents, they'll sit down and they'll negotiate and they'll do a cross license. Well, I take yours, and you take mine, that I think are important.

QUEST: All right. Let's talk about back to Nokia. Nokia is going to get a one off payment.

WINDSOR: Right.

QUEST: And you estimate, I saw your numbers, you estimate up to $160 million, and a quarter.

WINDSOR: That is the ongoing royalty, yes.

QUEST: Right. That is a sizable chunk of change.

WINDSOR: That is quite a lot of money, yes. But-but-

QUEST: I think we are both going to the same place here.

WINDSOR: It is-the one thing to bear in mind, it is a maximum figure. Because we have absolutely no idea, at this point in time, how much Nokia has to pay Apple, if anything. So at the moment that estimate would assume zero payment from the-

QUEST: Quid pro quo?

WINDSOR: Yes.

QUEST: OK. But let's talk in a strategic sense. The fact that they are having to pay this money does not on jot make a difference to Nokia's structural and systemic problems.

WINDSOR: No, the way we would look at it is that Nokia is falling into a chasm in terms of market share and potentially margins. Payments, ongoing payments from Apple may make the chasm more shallow.

QUEST: Or massage the balance sheet.

WINDSOR: Yes. But a chasm it still is.

QUEST: Final question, briefly, and-and this is one that you are not going to want to answer.

(LAUGHTER)

QUEST: Is Nokia hold beneath the water line?

WINDSOR: I don't know.

QUEST: That-

WINDSOR: I genuinely don't know. The thing to look for is, everybody is focused on the Windows mobile product at the end of this year. It is irrelevant as far as we're concerned, because that is an expensive device. That part of the market is lost. What matters are the cheaper devices that it is going to do on Windows mobile right about this time next year, that is what will determine the balance.

QUEST: Many thanks for joining us. Love to have you on the program.

WINDSOR: Sure.

QUEST: Telecom stocks were some of the best performers in Europe. All the main indices ended the day higher, shares of BT, Alcatel Lucent, Deutsche Telecom, they did well in the markets. Big banks made big gains- lots of Bs-with some investors reckoning they had been oversold. It was the miners that were heavy into the plus in London, along with oil and metals. The latest numbers out of China, very encouraging, industrial production, apparently, picking up pace. You were best in the DAX, worst in the FTSE.

Europe's finance ministers are holding emergency talks tonight as they desperately try to find a way to keep Greece afloat. Time is not on their side. It looks like we're going to get another bailout, bailout II. The question is whether private investors are going to get burned into the process. Germany's Finance Minister Wolfgang Schauble, would like them to take their haircut, which would, of course, be along with the public authorities. In exchange he says Germany is prepared to provide more cash.

(BEGIN VIDEO CLIP)

WOLFGANG SCHAUBLE, GERMAN FINANCE MINISTER (through translator): The German federal government is willing to participate in further measures to aid Greece. And the German parliament has given the government a mandate to do so. That is what we must prepare for next week. But do not expect any decisions today.

(END VIDEO CLIP)

QUEST: The German finance minister.

(DESK BELL CHIMES)

The U.S. markets are open and having had a correction which took us under 12,000 we are now back over it, 12,100. Gain of 1.2 percent. That is because retail sales were better than expected. You will be aware of course, two thirds of the U.S. economy is the consumer. If there is the scintilla of hope that demand is returning to the U.S. economy from the consumer division that is why you are seeing a 147 gain on the Dow. Don't be too sure that will survive.

The next person to lead the IMF will be a man or a woman of experience. But this man has had too much experience. By two years-after the break.

(COMMERCIAL BREAK)

QUEST: Stanley Fischer is too old to run the IMF. The governor of the Bank of Israel out of the race; at 67 the rules say he is two years past the age limit. The IMF executive board refused to wave that rule. Fischer says the age restriction is in his words not relevant today. He had hoped the IMF would change the regulation. Not only for himself, but also for the sake of future candidates.

Stanley Fischer said: "I have no regrets having submitted my candidacy. I do regret that I was not given the opportunity to demonstrate my capabilities and experience."

QUEST: So it leaves the race to run with two candidates. We know, of course, Christine Lagarde, who tonight is in Brussels, where of course she is taking place in the emergency Eurozone, Euro group meeting. She will also talk at a conference on commodities. Christine Lagarde has solid backing from the Eurozone, obviously. Egypt, Indonesia, the UAE, and Bahrain, those are important countries because they give her the emerging markets that she needs to win. She has so far not picked up one of the BRICS, or indeed any sizable emerging market that might-that might, then entice the United States to throw their 16 percent into her side.

Even Carstens admits Lagarde is the front runner. Agustin Carstens said I am not full of myself. It is like starting a soccer game with a 5- nil score. If you start 5-nil your chances will be-of being the winner, are slim. Mr. Carstens said that in Washington, D.C.

The IMF's executive board is in charge of picking the two final candidates. Domenico Lombardi used to be on the board. And Domenico joins me now from Washington.

First question: Why didn't they let Stanley Fischer run? After all, he is only two years older. The man is quite compis mentus (ph). It is a bizarre decision not to ask him to-you know, let him take is chances.

DOMENICO LOMBARDI, FORMER MEMBER, IMF EXECUTIVE BOARD: Well, there is no doubt that Stanley Fischer is a very well-respected economist. He enjoys a tremendous degree of respect among the most senior policymakers in the world.

Yet, the rules are rules. And there is a rule that says that the managing director of the IMF must be no more than 65 by the time of his or her own first appointment. Therefore, putting in place, you know, your candidacy, asking for the waiver, certainly puts you, in this case, Stanley Fischer in a weaker position.

QUEST: Hang on, hang on-

LOMBARDI: There are other authoritative candidates.

QUEST: Right, but Domenico, they had the power to waive. Why do you think they didn't waive? Was it because they didn't want to muddy the waters of a straight fight between Carstens and Lagarde?

LOMBARDI: Certainly the-you know a significant group of the IMF membership, either formally or informally has already set on Madame Lagarde as the next managing director. And therefore a candidacy like one by Stan Fischer, very authoritative economist, would certainly have complicated the decision-making process of the IMF board. But that said, there is this rule, and you know, really asking for a waiver puts you in a very weaker spot.

QUEST: Christine Lagarde, everybody says, is the now-or just about- the heir presumptive. But before she can be crowned and I assume that means the United States getting on board, and getting behind her candidacy, she has got to get a BRIC, she has got to get a sizable, significant emerging market. When does she get that, do you think?

LOMBARDI: Well, that should be happening in the next couple of weeks. The executive board is expected to interview both her and the other candidate, Agustin Carstens. And at the end of this process the board members representing, you know, the 187 IMF member countries will express their preference. Right now, Europe has backed the candidacy of Madam Lagarde. The U.S. has not publicly supported her candidacy. Although, in private today, it might have considered that they will be supporting her.

QUEST: OK.

LOMBARDI: And likewise emerging economies have been negotiating with their, you know, how they can raise their voice and their voting shares, should Ms. Lagarde become the new managing director.

QUEST: Do you think this goes all the way to a vote. Or does Carstens just spots the reality and pulls out?

LOMBARDI: Well, at first the executive board doesn't like to decide by casting votes. It traditionally operates by consensus. And therefore once, you know, a consensus emerges around a candidate it is likely that the other will drop out. And it is clear that so far, you know, Madam Lagarde is the favorite candidate.

QUEST: Many thanks, Domenico, for joining us from Washington tonight. Putting that in perspective. We'll talk more about this as the vote gets ever closer.

LOMBARDI: Thank you.

QUEST: Much appreciated to you, tonight.

Coming up, seeing stars. Michael Wu gets a celebrity endorsement for his new venture. Does it help him profit. The appointment is with the boss, after the break.

(DESK BELL CHIMES)

(COMMERCIAL BREAK)

QUEST: When you are the boss change is nothing to be feared. For the chief execs we are following, change is the difference between success and failure. Tonight, in Hong Kong, we are going to hear from Michael Wu, who is gambling on an upgrade of his fast-food empire.

Sarah Curran, who you are familiar with, My-Wardrobe in London, she knows it is time to raise her game and it is all about men's wear. We have an appointment with "The Boss."

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: Previously on "The Boss". Serving by example, Sarah Curran becomes a mentor to women wishing to make it big in business.

SARAH CURRAN, FOUNDER, CEO, MY-WARDROBE.COM: I don't think you ever reach a point where you think, I don't need anymore mentoring.

UNIDENTIFIED MALE: And on a visit to London, Michael Wu tells Richard Quest of his doubts, mistakes and regrets.

MICHAEL WU, CHAIRMAN & MD, HONG KONG MAXIM'S GROUP: There were a lot of misjudgments in the operations. Logistics, for example, we completely misjudged that.

UNIDENTIFIED MALE: The introductions have been made and the cameras are at the ready.

REPORTERS (onscreen translation): Kelly look this way. Right, look right!

UNIDENTIFIED MALE: With a small snip of the scissors Maxim's new and upgraded fast food store, MX, is officially open. Helping to draw in the crowd is Kelly Chen, singer, actress and the face of Maxim's moon cakes.

Michael Wu is targeting the younger market and Chen's celebrity endorsements makes his new restaurants more appealing.

WU: When we choose a celebrity we want that celebrity to have the right image for Maxim's. She cares about the community. She cares about Hong Kong. So we think that type of image resonates with the Maxim's brand.

UNIDENTIFIED MALE: It is a crucial moment for Michael. With the opening of MX, he is reinventing Maxim's. Hoping to change Hong Kong's perception of fast food.

WU: Fast food in Hong Kong is fast food. You are not going to get a very decent, pleasant environment. We want our fast foods to be a bit more pleasant, a bit more comfortable. A bit more stylish-not too much, but for people to actually be able to enjoy their meal.

UNIDENTIFIED MALE: By changing its direction Michael is moving away from his family's 40 year history, a risk he hopes will pay off by attracting new and more affluent customers.

WU: We want to upgrade our service. And the customers who are coming to the shop are sometimes executives, females, and they want a better dining experience than what they would expect if it is fast food.

UNIDENTIFIED MALE: High expectations that must translate into profits.

WU: We would expect, on average, for a renovated store to achieve at least a 5 to 10 percent increase in sales from before. If it doesn't achieve that, the renovation was probably not financially worthwhile.

CURRAN: OK, David, (UNINTELLIGIBLE) straight to camera, straight on.

UNIDENTIFIED MALE: In Camden, London, change is also afoot.

UNIDENTIFIED MALE: Can we have you just standing flat, like, and you know, maybe a bit out, yes.

UNIDENTIFIED MALE: Troy Munz (ph) is overhauling men's wear at My- Wardrobe. Overseeing it is his boss, Sarah Curran.

CURRAN: I think with men the photography has to be even more detailed.

UNIDENTIFIED MALE: Yes.

CURRAN: Because the woman is going to be sold on just what it looks like. If it is amazing then that-you know. But the guy, he wants to see and he almost wants to be able to visually touch it.

UNIDENTIFIED MALE: Today the team is shooting the new collection. And Sarah has learned that selling to men is a precise art.

UNIDENTIFIED MALE: That one, I think, that pose.

UNIDENTIFIED MALE: Presentation is everything.

CURRAN: Originally, when we launched men's-uh, I think we were quite, sort of, static in the form. You know everything was consistent in terms of if there was one blanket rule for how we presented the clothes. But actually as we have sort of understood the mail customer more, and with customer insight, we understand that actually every pose almost has to be different, according to what the item is that we're styling.

UNIDENTIFIED MALE: With Troy's help Sarah is changing how men's wear is presented. She knows the bar needs to be set higher than it was before.

CURRAN: There have been many times when I have seen products on the site, or I have seen the front page, and I've just gotten them to take it down, straight away, because it is just not right. And for me, it is about hitting it every time. And being perfect at what we do.

UNIDENTIFIED MALE: Sarah wants these photos to attract more men to her Web site. So far they make up only 15 percent of her customers. Sarah has been selling clothes for years, but selling to men brings very challenges.

CURRAN: (UNINTELLIGIBLE) Don't think you have to take this, because that is what makes you different and that is what is going to make you a leader. But would never-you know, if I take a decision, it is something that I completely believe is the right thing to do.

UNIDENTIFIED MALE: Next week, on "The Boss":

WU: Done right, it could be our next signature product.

UNIDENTIFIED MALE: He's tasted it and named it. But will Michael Wu's chocolate cake be flying off the shelves?

And in New York, Steve Hindy takes a gamble on a new product, as he goes from beers to tonics.

(END VIDEOTAPE)

QUEST: It is "The Boss" and it is only here on CNN. After the break, the flight of the future. The top designer at the Airbus company shows us how we'll be flying in 40 years. And you may not believe what they think the future looks like, in a moment.

(COMMERCIAL BREAK)

QUEST: Hello, I'm Richard Quest, QUEST MEANS BUSINESS. This is CNN and on this network the news always comes first.

(NEWSBREAK)

QUEST: The U.N. says the civilian population on the border of South Sudan faces huge suffering because of attacks by the Sudanese Army. South Sudan is supposed to become an independent country in a few weeks and the North have agreed to pull out of a disputed border district. There has been an intensification of the bombing campaign.

Iraqi forces have regained control of a government building in Baquba after a shootout with militants. The insurgents stormed inside earlier today, holding people hostage for hours. The attack included a suicide blast and car bombings. Twelve people were killed including four of the attackers.

Almost half the people living in Gaza are out of work. A report released by the United Nations shows unemployment at 45 percent. And that's one of the highest rates in the world. The report says Israel's blockade of the Palestinian territories is partly responsible for the desperate situation.

Cramped seats, smoking on board and no such thing as a decent in- flight movie, certainly not video on demand. Seasoned business travelers will remember what it was like catching a flight, even business class, perhaps, 30 years ago.

Today, that experience is just about unrecognizable. So come with me, please, and let's put the clock forward. And let's look at 2050.

That's what Airbus is showing us with this new cabin concept. And we can assure you, flying 40 years from now will look very different, indeed.

If you join me over at the super screen, I'll show you what this is really all about.

Now, well, Airbus designers are trying to think differently about every part of the plane. They are looking to the year 2050. And by then, they're pointing out different areas that might be of more interest or importance or more fuel ec -- fuel-efficient.

They want to change the way the cabin is arranged, too. So the cabin is going to change dramatically. The plane will mold to you. If you want to stay on top of business, you can stay on top of business, you can stay connected.

The seats will change. They will mold themselves to your being. It will shape itself to you. And what happens in front can be often movies or work. We are so far in the future, according to Airbus, that this is really out of this world.

(BEGIN VIDEO CLIP)

NICHOLAS TSCHECHNE, CABIN AND INNOVATION DESIGNER, AIRBUS: You -- if you look at current cabins, you clearly have clear class distinctions. So you have an economy class, you have a business class and maybe you also have a first class. And the future cabin experience will really be driven by value the passenger needs in a specific context. So you do have an area where it's more functionally orientated and you have adopting materials, adoptive feet. And in the front end of the cabin, it's more emotional driven. And here it's really about experiencing travel again.

(END VIDEO CLIP)

QUEST: Now, by 2050, Airbus wants views like these to be part of that experience. It's the cabin concept. And the idea is, as you can see, it is transparent. Wherever you're sitting on the plane, you will be able to get a bird's eye view, quite literally, up, down and around. There will also be more space for socializing, whether it's hosting a presentation to colleagues or enjoying a round of golf.

The thinking is that once you are in this concept cabin, you'll be able to do pretty much whatever you like.

How realistic is any of this?

I sat down with the executive vice president of engineering at Airbus, Charles Champion.

And I asked him, the wild, the wacky, how far can we go?

(BEGIN VIDEOTAPE)

CHARLES CHAMPION, EXECUTIVE VICE PRESIDENT OF ENGINEERING, AIRBUS: It's more a question a bit like concept cars to have concept planes, really, to put together technologies on one side and considering here what the guys what to do on the other side and try to put that together in order to really foster the ideas and debate around the future of aviation.

QUEST: So what concept, what's the core of the concept that you've come up with?

CHAMPION: Well, for the cabin, actually, it's to move out of the classical first class, business class, economy class, and to go more around zones. Zone, the smart tech zone, an interactive zone, a bit like a cave we have today, but on board the aircraft. And then the realizing, vitalizing zone in the front part of the aircraft.

And then afterwards, within each zone, you have a level of service that depends on what you are looking for and what the airline is ready to offer to you.

QUEST: I understand that your mission here is to think concept.

How realistic is this, this idea of zones?

CHAMPION: Well, I think the technologies are there. Now, actually, how you put them together, it depends a lot on what you want to do. But what you see today is that even in business or even in the first class, passengers do not want necessarily the same type of products. Some want to be connected all the time, to be able to work efficiently and during a two or three hours flight. Others really want to relax, you know, think about the space, look at the stars. And the idea is to come with the idea -- with -- with zones that allow you to go in one direction or another.

QUEST: The -- the plane is a long metal tube.

CHAMPION: Right. I'm not sure it's metal yet. And it probably won't be metal, by the way.

QUEST: All right. Composite.

CHAMPION: Composite.

QUEST: It's -- it's still a tube.

Do you -- is your thinking stretching, widening, moving, turning or are you wedded to the long tube?

CHAMPION: Well, actually, what we look for is not really a long tube but more a soda bottle with a wider part at the beginning and a more blending part at the end, so you can actually blend the engines and the wing around the fuselage to be more efficient. And then inside, actually, it's to use a -- a like bones and birds, you know, a technology with a polymer type of structure when you can actually have a wide open space, when you could actually get transparent just by touching your -- with your hands, so that actually you can open yourself to the sky if you wish to do so, of course.

So it's really looking like this type of biometric (ph) type of polymer technologies that you could apply 40 years from now. You have got really, to think, you know, how would it look like 40 years from now?

QUEST: Forty years from now, paint a picture for me, please, of a flight from London to New York.

CHAMPION: I think a flight from London to New York, actually, it starts where you are, your office, your home. And it has to be seen as you have to be recognized along the way. You don't have to go through all these long cues about security. You go to the aircraft, you just touch the aircraft with your hand. The aircraft says to you, good morning, Richard. This is your seat. Please put your luggage here. Then the luggage is taken care of by the aircraft and then issue on to go into the spa teach room, because you're a tech guy, or because you're a bit older, you want to go in the relaxing zone.

Afterward, you actually have your seat already morphed to your physiology and expecting your needs.

And an issue in the connected world, maybe you're ready to connect you to your home or whatever, your office. And if you're in the relaxing area, maybe you already have your seat and are analyzing your blood pressure, because you have rather high blood pressure. And we're already posing (ph) you to calm you down with a nice drink and maybe some vitaminizer (ph) and maybe a little bit of acupuncture, actually, would help you.

And that's basically how you intend to travel. It's really to make that travel experience, even for you, Richard.

QUEST: I can hear -- I can hear viewers at home saying, wonderful. Charles has left -- left reality. It's going to be ram packed with seats 40 years from now.

CHAMPION: No. No, because, actually, if you look at what happened, look at 40 years ago. First of all, some people were packed, others not. But many of us couldn't even afford flying. Now, we fly everywhere. And what's very interesting, you see a new business model emerging. You had the traditional carriers. Now you've got the charters and then the locals carriers, which actually you value service. So, actually, the way the business model of the airlines is going to evolve is going to provide a broad range of products, where, in some cases, you will be packed, but maybe you would pay a very little amount of money. And in other cases, you will really enjoy the experience.

(END VIDEO TAPE)

QUEST: Charles Champion of Airbus.

Truly inspiring stuff. Innovation has been at the heart of the aviation world. Ever since day one, whether it's the first flight of the 20th century or the commercial giants of today, when it comes to designing planes, well, you really do have to think big.

(COMMERCIAL BREAK)

QUEST (voice-over): Ambition over reality -- that's the hallmark of the world's big planes. There was the Dornier DOX, with six engines. In 1929, it was so heavy, passengers had to heave to one side to help it make turns.

The prize has to go the Spruce Goose, built by the reclusive Howard Hughes. Conceived during the Second World War, this monster had a wing span bigger than today's A380s. It was made of wood and flew just once. It is now a museum piece in Long Beach, California.

Many big planes were enormously popular. In 1935, PanAm started the China Clipper flying boat. They took six days to cross the Pacific, stopping overnight at islands on the way. The excitement and the glamour of these flying boats was captured in a movie.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: When the giant form of the 26-ton flying boat takes off from Alameda, California in an attempt to fly 8,600 miles across the Pacific Ocean to China.

QUEST: On land, early planes like the Dakota played their part in opening up continents. Eventually, propellers gave way to jets and in 1968, the Boeing 707 went into service. More than 1,000 of the planes were built.

But the cry for bigger planes continued. So Boeing built a jumbo jet. PanAm has long since gone, but the planes live on, with the much loved 747- 400 a familiar sight at airports around the world.

There's another thing to remember. Double-decker planes are nothing new. There was the French Deux-Ponts, which flew in the 1950s -- first class upstairs, steerage down below.

And the biggest plane in the world, well, it's the Antonov 225, but it's a military or cargo plane and it doesn't really count.

Now, when it comes to passenger planes, nothing has been built bigger than this -- welcome to the era of the super jumbo.

(END VIDEO TAPE)

QUEST: And if Airbus has its way, it will be the era of the different spaces and concept planes.

Some news to bring you that's just happening now.

The chairman of the U.S. Fed, Ben Bernanke, is warning that a failure by the U.S. government and the Congress to raise the debt ceiling risks potential disastrous consequences and a loss of consequence in America's creditworthiness. Now, this is all about the idea that Bernanke, that there could be some sort of technical default, there could be some sort of move. Bernanke said in the absence of a quick resolution, even a short suspension of payments on principal or interest on debt could cause severe disruption in financial markets.

How are those financial markets reacting?

Up 151. So they're taking Bernanke's comments in their stride.

And, clearly, there have been -- there will be even a technical default any time soon.

Facebook insists it's growing in its biggest markets. An Internet monitoring site says it's running out of friends. We'll look at where they might be going and whether Facebook is slipping in the social media popularity contest.

(COMMERCIAL BREAK)

QUEST: Facebook is denying an exodus of users in the U.S. and Canada. And it says figures from the monitoring sites inside Facebook aren't accurate unless other tracking data shows continued growth.

This is what it's all about. Here's where Facebook has gone up and down according to Inside Facebook.

Now, if we start with Canada, you see that, here, they -- according to this report, down 1.5 million users. And perhaps most worryingly, the age 55 plus is the largest growth in 2010 for Facebook users at the moment. The youngsters are not -- oh, you youngsters. Even I sound like an old pensioner saying that.

They are not using Facebook in the way that they were.

That's a similar story in the United States, which is believed to have lost six million users.

But perhaps not quite so significant. I mean after all, Facebook did start there in 2004. It was massively important and familiar with the Ivy League schools and that's how it quickly expanded.

But from 2004 to 2011, that is an age -- an age in the information revolution. So where -- if it -- if Facebook is losing up in here, where is it gaining?

It is gaining in Brazil. But in Brazil, even though it's gained two million, Orchid is still the larger and preferred social media site.

Move across south-south, as Stephen King now calls it, and India, when you have 1.7, which is now over -- Facebook has overtaken Orchid this year.

So, who is bigger and how is it running if you take Faces versus the birds?

Facebook has 500 million users at the moment, give or take a few million between friends. And Twitter at 175 million.

But where is the growth between those two, as the future we look forward to?

And which, in many ways, is considered to be the more satisfying experience for the user?

We're always happy, on this program, when Jeffrey Cole joins us, the director of the USC Annenberg School Center for the Digital Future.

Jeffrey, you have always told me on this program that it might be two years, it might be five years, but Facebook's days are numbered.

Do you believe what we are seeing is the beginning of that?

JEFFREY COLE, USC ANNENBERG SCHOOL CENTER FOR THE DIGITAL FUTURE: I absolutely do. I mean keep in mind, we've never seen a community reach a half a billion people. As you pointed out in the INTRO, it's gaining significantly in the developing world. Orchid was a way of life in Brazil. Facebook now gaining. But we see, in mature markets, a trend that occurred with Friendster as it gave way to MySpace, when Rupert Murdoch bought MySpace, we never thought he would be able to hang onto his teenage users.

We have said and we still believe that to a teenager or a young person, an online community is like a nightclub. And when the nightclub becomes too popular or the uncool kids start showing up, you're out of there.

QUEST: Right.

COLE: And what's the worst thing that could happen to a teen in a nightclub?

Your mother shows up. Well, now your mother wants to friend you on Facebook.

QUEST: All right. So, we've got -- I think we -- we mustn't overstate this must we, Jeffrey, because there's still -- still half a billion and there's still many, many, many more billions or hundreds of millions to join in the developing world or the developed -- parts of the world.

COLE: Absolutely. And we think Facebook is going to grow for at least five more years in total users, probably come close to a billion people. But in the markets, it's become -- it will become as MySpace did...

QUEST: Right.

COLE: -- although MySpace was never nearly as popular...

- a victim of its own success. It becomes uncool as everybody is on it.

QUEST: I just need to quickly apologize. In my telestrations here, I successfully managed to put Australia and New Zealand into the developing world. That was just a -- a -- sometimes the technology gets the better of me over here.

If they're not -- if they're not going to Facebook, where are they going now?

What -- where are the cool kids meeting?

COLE: We -- well, we actually believe Facebook will probably be the last of the monolithic communities, that we'll never see anything get hundreds of millions. We think people are looking for smaller -- and I say looking, this is happening very, very slowly and is going to take years. But we think it's going to fragment into smaller and more specialized communities that are made up of true friends rather than associates we call friends.

And the era of hundreds and hundreds of friends may very, very slowly be coming to an end. So we think smaller and more specialized communities.

QUEST: But is there any particular one, Jeffrey, I should keep my eye on?

COLE: Your eye or your investments on?

Not right now. Right now, there's nothing -- there's nothing -- and we don't think anything will break out. But we think, also, ultimately, they will become profitable because advertisers are going to be really interested in you and who your real friends are rather than the dozens of people you just acquire.

QUEST: Jeffrey, great to have you on the program making -- talking good common sense.

We thank you very much, indeed.

Last night, Facebook streamed the Webby Awards live from New York. It was an event where CNN's Felicia Taylor, who arrived to talk to the winners.

(BEGIN VIDEOTAPE)

FELICIA TAYLOR, CNN CORRESPONDENT: Here we are at the Hammerstein Ballroom in New York City, where the cameras are flashing, the stars are walking the red carpet and glittery awards are about to be handed out. And, of course, I dressed the part. But no, this is not the Oscars. This is the Webbies, celebrating the best of the Internet.

(voice-over): One big winner of the night, comedy Web site, Funny or Die swept the competition, witnessing nine awards in multiple categories, including Webby film and video artist of the year.

ADAM MCKAY, CO-FOUNDER, FUNNYORDIE.COM: Well, the Webbies, I mean, let's face it, it's the future. It's now. All the other dusty awards shows, like the Academy Awards, the Nobel Peace Prizes, they've become a yarn. And right now, this is the place to be. And with all due respect to Desmond Tutu, Barack Obama, sorry, fellows, we got a Webby.

LAURENT TOUIL-TARTOUR, DIRECTOR, "URBAN WOLF": They decided to honor us with a best drama award. So for me, it's very meaningful, you know?

TAYLOR: Adrian Grenier of Entourage fame has launched a new Grenier Web sites, SHFT.com, and came to accept the award along with his business partner.

ADRIAN GRENIER, CO-FOUNDER, SHFT.COM: Simply because we won two of them, we figured we should show up and accept the awards.

PETER GLATZER, CO-FOUNDER, SHFT.COM: I think the Webbies are increasingly important. Obviously, new media is -- is where everything is happening now. And we were very honored and humbled to win.

TAYLOR: I sat down with fashion legend, Anna Wintour, who won a Webby for best fashion, to find out how Vogue.com stacks up against the competition.

ANNA WINTOUR, EDITOR-IN-CHIEF, "VOGUE": There are a lot of Web sites out there that cover fashion and style and celebrities and culture, all the things that we do at Vogue.com. But we are, you know, very particular about who we feature and who we choose and who we put up on -- on the Web site.

So I -- I think all that is coming through to -- to everyone who looks at the Web site. And the numbers are obviously indicating that.

TAYLOR: The Internet has seen such tremendous growth, from bloggers, social media, in business and in our everyday lives, where words are at a premium. But at this event, the winners must keep it short. Only five words are allowed in an acceptance speech.

WINTOUR: Sometimes geeks can be chic.

GRENIER: The shit's hit the fan.

UNIDENTIFIED MALE: Long articles but short speech.

DAVID-MICHEL DAVIS, EXECUTIVE DIRECTOR, THE WEBBY AWARDS: It's a very influential audience. So the average Webby Award account here, Twitter account represented, has more than 50,000 followers. The average account in the world has less than, I think, 100 followers, just to give you some sense. So these are really influential people. And like I said, if you believe that the Internet is really at the core of what's changing the world and these are the people making all those things, it's a great audience to be talking to.

TAYLOR: This is the coveted statue of the night -- the Webby. And certainly for winners, it does mean peer recognition. But it doesn't necessarily turn into profits for their Web site.

Felicia Taylor, CNN, New York.

(END VIDEO TAPE)

QUEST: I think I'd pay good money to know what that was supposed to represent.

We'll have an exclusive interview with Anna Wintour discussing the future of new media on tomorrow's program.

(COMMERCIAL BREAK)

QUEST: The weather forecast demands our attention and Guillermo is doing the demanding at the World Weather Center.

GUILLERMO ARDUINO, CNN METEOROLOGIST: I am reading the Qantas Web site, Aerolineas Argentinas' Web site online. And Qantas actually is saying that flights to and from Adelaide, Perth, Sydney, Camber (ph) and Melbourne have been confirmed for Wednesday from Johannesburg is confirmed. New Zealand has been canceled. Tasmania, canceled. Buenos Aires, to and from, still under review. That's Qantas.

Argentine Airlines is operating. Mexico, Madrid, Oakland, Sydney, Sao Paulo, Rio and Santiago.

And then LAN is saying that to the area of Buenos Aires, Argentina, the situation is complicated and they are not operating.

So it is a little bit confusing. And needless to say, we went through the different organizations to see what light they can bring to us concerning the situation. And it's rather confusing, as well.

So we think that we'll have to take it one day at a time. You liked, yesterday, this graphic, Richard, we have Antarctica here, Australia to the north, South America to the south and the presence of sulfur dioxide over here, all around. It is the time of the year when we see, actually, the jet stream way down -- way -- moving up. So it is allowing the cool air to zip -- to slip in.

Now, see this picture from last week, when the volcano started to erupt and how the ash was coming here, the influence of the wind pushing that northward and complicating things, especially with the major airports are in South America -- Santiago, Buenos Aires, Montevideo.

Montevideo

At the same time, we see the presence of ash here. Of course, in Northern Patagonia, moving into B.A. again. That's ash.

Then in South Africa, because of the same circle that we were talking about and into Australia too.

Now we know that Tasmania actually is under the influence of the ash; New Zealand, too. This is from Sunday. But I want you to know that the situation is complicated and we can say, so long as the volcano continues to emit ash, the problems will persist. And it seems that that's what's happening.

So we'll have to take it one day at a time -- Richard.

QUEST: All right, Guillermo.

We'll talk more about it tomorrow.

I'll have a raft of questions for you...

ARDUINO: Excellent.

QUEST: -- which we need to get scripted.

We'll have the Profitable Moment after the break, all about age.

(COMMERCIAL BREAK)

QUEST: Tonight's Profitable Moment.

There is an irony to the IMF's decision banning Stanley Fischer from running for managing director because, at 67, he is over the age limit, over the hill. This is the very same organization that's advising countries like Greece to raise the retirement age to help solve deficit and structural problems.

So apparently it's OK for you and me to work into our dotage, but I want you to be the managing director of the IMF, you have to be 65 or younger. I don't understand the logic of that.

Stanley Fischer is amongst the best central banks in the world, respected and admired and not afraid to speak his mind. But I guess that's what happens when you get to a certain age. It's just a shame that in an era where poor pensions mean we're working longer, it's a blow to those over 60 or those of a certain age.

And that's QUEST MEANS BUSINESS for tonight.

I'm Richard Quest in London.

Whatever you're up to in the hours ahead, I do hope it's profitable.

"WORLD ONE" is next.

END