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HP, Samsung, Sony Introduce New Tablets; 'Leading Women': Angeliki Frangou, Daniela Mercury; Nvidia Announces New Portable Gaming Console; Microsoft's Struggles Detailed; Italian Elections Examined

Aired February 26, 2013 - 08:00:00   ET


PAULINE CHIOU, CNN HOST: Hello, I'm Pauline Chiou in Hong Kong and welcome to NEWS STREAM where news and technology meet.

This hour, we will bring you all the latest from the Mobile World Congress in Barcelona, the mobile industry's biggest event of the year. But we begin with the day's big news story.


CHIOU (voice-over): Benedict XVI is in his last days as pope, but there's no escaping the scandals surrounding the Vatican. We will go live to Rome with the latest.

Italian elections end in stalemate and a hung parliament could hang the country's economy out to dry.

Plus, how do you like your horsemeat? Well done or maybe medium rare? We visited one London restaurant serving up equine burgers on purpose.



CHIOU: There are two major stories leading the news this hour, a cliffhanger result in the Milanese parliamentary elections. And continuing turmoil in the Catholic Church.

We begin at the Vatican and the scandals that are tarnishing the last week of the reign of Pope Benedict XVI. Britain's most senior cleric has resigned amid accusations of inappropriate conduct with young priests dating back 30 years.

And Italian newspapers have published accusations of a secret cabal of gay priests within the church hierarchy. A former Dominican friar tells CNN's Christiane Amanpour that the Catholic Church is at a crossroads.


MARK DOWD, FORMER DOMINICAN MONK: -- having been a friar myself and having been an openly gay Catholic for the last 25 years in my journalistic career, homosexuality is the ticking time bomb in the Catholic Church.

On the one hand, the church teaches that the condition of same-sex attraction is intrinsically disordered -- those are Cardinal Ratzinger's own words from 1986 -- and yet we know that actually about half, if not more, of all the people attracted into seminaries in the priesthood are gay themselves.


CHIOU: Controversial claims at a pivotal time in the Catholic Church. In just two days, the pontiff will formally step down and the cardinals will begin the process of electing a new pope. And now we are learning new details about the pope's life in retirement.

I'm joined now live by Becky Anderson, who's in Rome.

And, Becky, how is the Vatican handling this latest swirl of scandals that's surrounding the Catholic Church just two days before the pope steps down?

BECKY ANDERSON, CNN HOST: Well, it can't be easy; they've certainly just held another news conference. They held one about this time yesterday and that would have been difficult. It was at the time that we had just heard the bombshell that Britain's top Catholic cleric had resigned.

Today, well, it's almost (inaudible) housecleaning going on. And there's lots of information coming out from the Vatican, which, of course, is just behind me here, ahead of the pope's last general audience and then his resignation, of course, on Thursday; lots of details about what the pope will be called once he resigns and other sort of specifics that people have been asking questions on.

So firstly, just this word from the Vatican on the pope himself. Have a listen to this.


REV. FEDERICO LOMBARDI, VATICAN SPOKESMAN: Pope Benedict XVI will continue to be called Pope Benedict XVI. And then it was (inaudible) or Roman Emeritus Pontiff (ph). This is the titles that have been told, have been chosen for the Holy Father after the resignation date. And it was Pope or Holiness Emeritus Roman Pope (ph).


ANDERSON: His Holiness, Benedict XVI, will retain that name. He won't convert back to his original birth name, which, of course, was Joseph Ratzinger.

Now what we have heard from the Vatican over the past couple of days is that conclave will be around sort of mid-March. We haven't got the date yet and we should hear that on March the 1st, which is Friday, of course, after the pope's resignation.

So I'd say a lot of sort of housecleaning going on today as the cardinals arrive here, more than 100 of them, of course, eligible; some 118, in fact, eligible, although it's looking as if about 115 or 116 will vote.

And you know, the whole thing has been sort of very difficult, I think, for the Vatican over the past couple of days. But they carry on sort of regardless, getting on with the process, which is the next couple of very, very important and almost unprecedented in this, the first pope who's resigned, of course, since 1415, nearly 600 years.

A couple of other bits of information that have come out; people have been asking questions about what the pope will wear after the end of his pontificate. He'll wear a simple white robe, we're told, no red mantle.

The shoes, that's important. You've always seen him in red shoes. Apparently he was given some brown ones by a little girl on a trip to Mexico last year and he'll continue to wear brown ones rather than red ones going forward.

There's a ring called the Fisherman's Ring, which, when a pope normally dies, is destroyed; it has the papal seal on it. That ring that Pope Benedict wears at present will be destroyed and the seal will be destroyed; nobody knows what will happen after that.

But those are the sort of details that we're getting today less on the sort of sex scandal allegations that have been swirling around this city and, of course, Vatican City over the past couple of days, Pauline.

CHIOU: Yes, those are colorful details you provided, Becky. There's a lot of news going on in Italy, and we will come back to you in just a couple of minutes.

Well, questions about how the Catholic Church has handled abuse claims against priests around the world are darkening Benedict's last days as pope.

On Monday, the Vatican confirmed the pope had accelerated the resignation of Cardinal Keith O'Brien, the archbishop of Scotland.

CNN's Matthew Chance traveled to Edinburgh to gauge reaction there.


MATTHEW CHANCE, CNN SR. INTL. CORRESPONDENT (voice-over): At evening mass, the faithful at Edinburgh have yet another scandal from which to be delivered. The resignation of Cardinal Keith O'Brien, one of Britain's most senior Roman Catholic clerics, has come as a shock.

UNIDENTIFIED FEMALE: It has shocked me greatly. It really has, because he looked like a really good, lovely upright man.

UNIDENTIFIED FEMALE: I'm obviously very sad for the, you know, for the -- what's happening in the church and the example it's giving, whether it's true or not, what has been said. It's obviously a very sad day for the church.

CHANCE (voice-over): The sudden departure follows this newspaper report, in which four priests -- three current, one former -- accused Cardinal O'Brien of having what they called inappropriate relations with them in the 1980s. The implication is of homosexual contact.

The cardinal denies the allegations. But his resignation letter reads, "For any good I have been able to do, I thank God. For any failures, I apologize to all whom I have offended."

CHANCE (on camera): Well, here's the thing. Cardinal Keith O'Brien has been a vocal defender of church doctrine on homosexuality and same sex marriage, publicly rejecting them both. Supporters say he has voiced liberal views on the celibacy of priests, suggesting that they should be allowed to marry women. But on the issue of gay rights, he's often come across as a hard-liner.

All the more surprising, then, that a scandal of this nature should end his career.

CHANCE (voice-over): It's damaging for the Vatican, too; already mired in pedophile sex scandals, it's trying to shore up its reputation ahead of the papal election in March. Cardinal O'Brien had been preparing to vote in that conclave, recently speaking of his worries.

CARDINAL KEITH O'BRIEN, ARCHBISHOP OF SCOTLAND: I will respond as well as I possibly can to the will of God for me at this time and to the will of God for the Roman Catholic Church at this time.

CHANCE (voice-over): But now, he won't be going to the Vatican at all, preferring, he said, for attention to be focused on Pope Benedict and his successor, not on this scandal surrounding him at home -- Matthew Chance, CNN, Edinburgh, Scotland.



CHIOU (voice-over): As Pope Benedict XVI prepares to step down, join us for a closer look at his nearly eight years as pontiff, his resignation and his legacy as the Catholic Church moves forward. That's the "Legacy of a Pope." See it on Thursday at 10:30 am in London, 6:30 pm Hong Kong time.


CHIOU: Well, for the first time in recent history, Italy has a hung parliament in which no coalition has enough seats to form a government.


CHIOU (voice-over): A center left coalition, led by Pier Luigi Bersani here, won 29.5 percent of the seats in the lower house of Parliament. Former Prime Minister Silvio Berlusconi's center right coalition was just behind with 29.1 percent. An anti-government protest party led by an ex- comedian named Beppe Grillo came in third and a bloc led by recent Prime Minister Mario Monti was a distant fourth.

Now in the Italian Senate, Bersani's center left -- so won 31.6 percent of the vote to Berlusconi's center right got 30.7 percent -- and the results are inconclusive because a majority is required in both chambers of Parliament to form a government.

So let's go back to Rome right now, where Becky Anderson is standing by again, juggling the second major story, with her eye, this time, on the Italian elections.

Now, Becky, after these elections, how will the political landscape most likely shape up? I mean, can they pull together some sort of a coalition?

ANDERSON: Yes, no, it just muddies the waters completely here. Let's work out what's clear from these elections.

What's clear is that Italians in their droves (ph) protested against Mario Monti's austerity reforms. Don't forget, he's been raising taxes, particularly a very punitive property tax on Italians in order to try and get Italy's house in order and to try and play by the European and Eurozone rules, of course.

And things were going fairly well as far as the Europeans (inaudible) investors in, in Italian assets were concerned. It looked as if Mario Monti were sort of doing a bit of housecleaning. But Italians don't like it; it hurts and they voted in droves for the two anti-austerity parties.

Now that is Berlusconi's center right alliance. They're looking to give back the money from the property taxes, for example. That was part their campaign mandate.

And then a man called Beppe Grillo. You're absolutely right. The clown prince of Italian politics, as he was once known, now stealing some 25 percent of the vote. I've just spoken to Beppe Grillo, and he's told me that he is not prepared under circumstances to horse trade, to negotiate, to go into coalition with either Bersani on the center left or Berlusconi on the center right.

If that were the case -- and I put this thing in -- if that were the case, there will be a hung parliament here. There will be no civility in Italian politics and the likelihood is that Italy will have to go to the polls once again. And that is the worst-case scenario, not just really for Italians here; the Italian economy, but for international investors in this economy.

And don't forget, this is the third largest economy in the Eurozone, the eighth largest in the world, despite the fact that last year it was in recession, 2.2 percent negative growth rate for the year. Listen, per capita GDP hasn't improved here in 2013 or 2012 compared to the numbers in 1999. Things are really tough here; people are protesting, as I say, the austerity.

But as far as what comes out of this election, it's less than conclusive. It's less than inconclusive. It's a real mess, it's got to be said.

CHIOU: Yes, and investors are certainly feeling the jitters because the Asian markets reacted to the Italian elections. And the markets right now in Europe are also taking because of what's happening and the repercussions for the Eurozone in general.

All right, Becky, thank you very much for the update there, Becky covering two stories, the Vatican also and the Italian elections.

In other news now, a rocket fired from Gaza this Tuesday has broken a months' old cease-fire in the region. The rocket landed on a road outside of the town of Ashkelon in southern Israel. That's about 15 kilometers from Gaza.

Israeli police say no injuries have been reported. The cease-fire goes back to November and at that time, Egypt and the United States helped to end an eight-day conflict between Israel and Hamas that had left more than 160 Palestinians and six Israelis dead.

Coming up on NEWS STREAM, all the latest from the World Mobile Congress in Barcelona, including Microsoft's attempts at cracking the mobile market have tanked so far. So how is the company planning to turn that around? Tablet hits and tablet duds; three of the big new products at this show are tablets, and we'll test them out.

Also the rise of Chinese smartphones -- Huawei and ZTE are chasing a bigger market share from their big competitors. Stay with us.




CHIOU: Welcome back to NEWS STREAM. Let's go over to the Mobile World Congress in Barcelona, Spain, now, and Kristie Lu Stout.

And, Kristie, I know you've had another busy day there in the tech world.

KRISTIE LU STOUT, CNN ANCHOR: That's right; day two, very busy. Thank you very much indeed, Pauline. And this is NEWS STREAM live from the Mobile World Congress in Barcelona. We'll be here until Thursday along with all the biggest names in the mobile industry.

Now we're in the middle of a time of huge disruption for the entire tech industry, as mobile devices replace desktop computing. That's means huge opportunity for new companies to dominate. It's also a (inaudible) to established companies. And no company is bigger on the desktop than Microsoft.

But Microsoft is struggling. It is struggling in the mobile space. In fact, according to the research from IDC, the Windows Phone operating system is used in less than 3 percent of all smartphones sold in 2012. Now that's even less than Symbian and now nearly defunct operating system.

Now the Microsoft himself, Bill Gates, has described the company's mobile strategy as, quote, "a mistake." And earlier -- and I spoke to Microsoft's senior marketing manager, Greg Sullivan, and asked him if he thinks that's fair.


GREG SULLIVAN, MICROSOFT SENIOR MARKETING MANAGER: Yes, I think Bill was referring to our strategy from the, you know, early 2000s, which is, you know, a million years ago in terms of the mobile business now.

This -- the market has changed tremendously and I think one of the -- silver lining of this is -- for us is that we kind of reapproached this space and said the smartphone experience should be more personal. It should be about the things that you care about, not what someone else decided was interesting. And so that's when we built Windows Phone to really focus on that idea of making the most personal smartphone.

STOUT: I talked to the CEO of Nokia yesterday, Stephen Elop, and he is a big champion and defender of Windows Mobile. But when are we going to see Windows Mobile really fight back and push hard against Google Android?

SULLIVAN: Well, I think we're seeing it right now. Windows Phone 8 launched in the fall of last year and one of the things that we've seen since then is there's a real market increase in the -- in the sales and the interest.

We see three times as many people walking into retail stores, asking for a Windows phone, and four times as many folks walking out having bought it. So we're seeing a tremendous momentum across the world for the platform. And so Stephen's excitement is certainly warranted.

STOUT: I just talked to the head of Mozilla Firefox, and they've made the announcement Firefox open source operating system for mobile is (inaudible) going to be released pretty soon.

What is Microsoft's feeling about the open source threat in the mobile space?

SULLIVAN: Well, I think it's a demonstration that this is a very dynamic and competitive industry. We also think that there are some real requirements now. When people choose a smartphone today, they don't think about it in isolation. They think about how it will work with the rest of the devices they own, the tablets, the PC, the servers at work and how can I get work done?

Even gaming; will it work with my TV and my game console? So they think about this as the part of a range of things that need to work together.

And that's one of the strengths of Windows Phone is that all of the stuff you care about flows across those devices and kind of comes to you in a way that no other platform does. So I think those requirements will be increasingly important going forward. But it certainly is a competitive space to be in.

STOUT: We're talking about affordable smartphones next. I mean, Microsoft recently partnered with Huawei to develop smart spaces (ph) for Africa. Tell me about it.

SULLIVAN: Well, it's a really exciting initiative. One of the great things about our platform is that we focused on, is enabling our software to perform very, very well, even on more affordable phones, which is not something that's necessarily true of our competitors. It's less expensive phone as a -- not as satisfying experience.

With Windows Phone, you have the full (inaudible) experience, the live tiles all in the apps (ph), on a phone that's more affordable. So we're working with Huawei and other partners to really create an ecosystem that will spur develop of -- and of mobile in Africa, software vendors building applications, great content that's designed for Africa. So this is a really exciting initiative.

STOUT: Now Huawei's a big Chinese manufacturing brand. They're a partner of Microsoft Windows Mobile. Partnering with them and other handset makers in China, are you going to get significant slice of market share in the world's biggest smartphone market?

SULLIVAN: We certainly expect to. In fact, we're already seeing strong signs of that is happening. One of the things that we did about a year ago is to enable some of the networking technology required in China, and our OEM partners have been -- built very compelling devices. The Nokia Lumia 620 is doing very, very well.

So you'll continue to see our platform and our great hardware partners, again, deliver on those experiences that are very high performance, even on a phone that's affordable. So we're seeing great success there as well.

STOUT: OK. And Microsoft and mobile, what's the end game for you? Do you want to get first place again?

SULLIVAN: Well, that's always the goal. And I think we're -- we've shown that we have patience to build the critical mass of the platform before, whether it's enterprise software or gaming platforms. And in mobile, we're certainly on the right path. And the current trend is very, very positive and impressive.

One of the things that is going to become increasingly important, though, is this notion that mobile is not in isolation. It's part of the broader set of technologies that we use to get our jobs done, to stay in touch with our friends and family, to learn and have fun. And they need to work together.

And so you'll see us continue to invest in having the stuff that you care about show up on the device that you happen to be in front of, without you having to do anything. So we've got some real advantages there. And I think we'll continue to improve those.


STOUT: That was Greg Sullivan of Microsoft, speaking to me earlier.

Now there have been rumors, a lot of buzz here on the show floor, that maybe Microsoft may soon introduce its own branded smartphone, the handset made by Microsoft itself. Now we asked Greg Sullivan about it, but his response: he didn't confirm or deny the rumor. So got to watch the space.

Now you're watching NEWS STREAM. Now coming up next, Europe's horsemeat scandal has products being pulled off the shelves in places as far away as the Dominican Republic and Hong Kong. I mean, consumers are understandably leery. But if you knew what it was from the outset, would you eat horsemeat? Zain Verjee takes a taste test ahead.




STOUT: Welcome back. Now a sightseeing trip in Egypt ends in tragedy. A hot air balloon, it exploded and plummeted to the ground in the famous temple city of Luxor, killing 18 of the 21 people on board.

Now most of them were foreign tourists. The three survivors, they've been hospitalized. Now the tourists, they were from Hong Kong, Japan, Britain, France and Hungary. Egypt's state-run news agency blames the crash on a gas explosion. And the provincial governor has banned all hot air balloon flights until further notice.

Now IKEA has pulled its Swedish meatballs from most of its stores in Europe plus some in Asia after tests in the Czech Republic showed some meatballs contained horsemeat.

Now the Swedish furniture giant says it made the move, even though its own tests have not detected any traces of horse DNA. IKEA meatballs will still be available in the U.S. and Canada because the company says stores there have a different supplier.

Now with horsemeat so prevalent in the news these days, a pub in London seems to be capitalizing on that and saying that a, well, all publicity is good publicity. Now how so? Well, it started selling horse burgers. And that got Zain Verjee very curious.


ZAIN VERJEE, CNN CORRESPONDENT (voice-over): I'm used to riding horses, not eating them.


VERJEE: Frankly, I'm a little bit nervous right now, and that is because I know what I'm about to eat. In places in Europe, like France, Germany, Italy, Switzerland, they eat horse all the time. But not here in the U.K. I'm about to try it.


VERJEE: Thank you.

I've got two burgers in front of me. One is cow, one is horse, and I don't know which one is which. So I'm going to give it a taste and see if I can find out which of these two is Seabiscuit, how it tastes.

Mmm, that's good.

All right. Well, that's a little gamy, I thought.

Take two: is it cow or is it horse?

Mmm. This is tough actually. I don't know which is which.

Beni, can you help me out? Let me guess.

I found this burger tougher and it smelt a little bit stronger. And because I'm a big carnivore and I really do know cows, I think this is cow. Am I right?

BENI PRI, PUB MANAGER: You're absolutely (inaudible).



VERJEE: I love being right.

PRI: Well cone.

VERJEE: Thank you.

What made you have the idea to get a horse burger? I mean, are people into it?

PRI: Well, the patrons in the pub, I think, will love it. I've already had reservations for burgers, and I had someone call up this morning, trying to ask for a steak. But we're simply going to try out the burger first before we move onto steak, so.

VERJEE: Right.

Thanks a lot, Beni.

And by the way, I had to try all three wines so I could decide what actually is the best paired with the horse burger. And I've settled on the merlot rose.


PRI: Cheers.



STOUT: Zain so loves her wine; she loves her horsemeat. Great story there.

Now tropical cyclone Rusty is strengthening off the coast of Australia. And many U.S. states are snowed under. Samantha Moore at the World Weather Center, she'll be joining us later with all the details. Stick around.




STOUT: All right. I'm Kristie Lu Stout, live at the Mobile World Congress in Barcelona. And you're watching NEWS STREAM. We'll have much more from this industry (ph) trade show in just a moment, but right now, let's bring you your world headlines.

Now, first up, controversy over abuse scandals reigning in the Catholic Church during the last days of Benedict the XVI's papacy. The Vatican says that Benedict will keep the title "His Holiness" and be called pontiff emeritus after he steps down on Thursday.

Elections in Italy have failed to produce a clear winner. Pier Luigi Bersani's center-left coalition ekes out a win, in both the upper and the lower houses, but not by enough to form a government. Former Prime Minister Silvio Berlusconi's center-right coalition was a close second. It is the first hung parliament in Italy's history.

And the U.S. Secretary of State John Kerry is in Berlin for the second stop of a nine-nation diplomatic tour. Europe's economic crisis and Syrian civil war are likely to top his discussions. It is his first overseas trip as Secretary of State. On Monday, Kerry said the U.S. would continue to support Syria's opposition.

Meanwhile, Syria's opposition leaders say that they will attend this week's international conference on Syria in the Italian capital. And if so, talks between them and Syrian authorities may be possible. On Monday in Moscow, the country's foreign minister said Damascus is willing to meet with Syrian rebels.

Welcome to day two of the Mobile World Congress here in Barcelona. And we got some time now to walk the floor to see what's big at the show. Yesterday, we told you how Nokia is making a big push with cheaper phones, smartphones and plain mobile phones. And in the hall, to my left over there, with HTC, they're even showing off the new Android phone, but the biggest new products of the show are tablets.

HP, Samsung and Sony, they all have new tablets at the show, all in completely different sizes. So, we have CNN Money's Adrian Covert to give us his take on the three tablets starting with the smallest, HP's Slate 7.


ADRIAN COVERT, CNN CORRESPONDENT: It's kind of a confusing product. I mean, what HP wanted to do was come in and offer a tablet that was cheaper and more affordable than everything else, which is a smart idea. But given like the specs that it has and what it is, it actually still costs a little too much money. For $32 more you can get a far nicer tablet from, you know, someone like Google with their Nexus 7 or Amazon, the Kindle Fire. And, you know, it will last longer. It's not that much more expensive, and so, you know, I just -- I don't think that, you know, HP, you know, priced their device low enough, for, you know, how it's probably going to end up performing and for what it's going to do.

STOUT: So, the price line is the issue.


STOUT: All right, the Samsung Galaxy Note 8, you checked that out as well. How was it?

COVERT: You know, it was nice. It was, you know, fast, it was speedy, it has some interesting, you know, stylus (ph) features and, you know, it works with the remote control, and so, I think, it's, you know, sort of, you know, angles to compete with the iPad mini. And so, you know, prices still, you know, to be determined. We'll see, you know, how much it costs, but if they can, you know, get it at, you know, a reasonable range to where the iPad mini is, they probably have a shot at, you know, competing with Apple in that regard.

STOUT: It's a solid Samsung tablet, they are going to go after the iPad mini. I know you personally have an issue with the user interface.

COVERT: Yeah, you know.

STOUT: Tell me about it.

COVERT: I'm not the biggest fan of Samsung's user interface. I think, you know, they could, you know, -- you know, sort of to be -- to make their design a little bit more advanced and sophisticated, but, you know, at the same time, it's not -- not the worst thing I've ever used. So.

STOUT: Yeah, and now let's talk about the biggest one at the bunch. Is it the ten inch ...


STOUT: Xperia 7 (ph) tablet from Sony. How did it go?

COVERT: It was -- it's really nice. It's probably the thinnest and lightest (inaudible) tablet on the market. And when you pick it up, you immediately notice it. But, you know, one of the issues when you have a tablet that's thin and light, sometimes it will feel cheap. And in this case, like the materials, everything was really beautiful, and it worked well.

And you know, it doesn't quite, you know, have the most powerful and up to date components, but they are good enough to where, you know, you're probably not going to tell the difference between this display and the (inaudible) display, which is better, but, you know, only marginally so. And so, you know, it's a little bit high price. It starts at $500 for a 16 gigabytes tablet, which is the same, as, you know, the iPad 4. So, I mean, it's little bit high priced, but at the same time it's so thin, so light, and it's also waterproof, which is really cool.

STOUT: Oh, wow.


STOUT: Waterproof, beautiful, thin, it works well. And this is a Sony product, right?

COVERT: Yes, absolutely.

STOUT: Is this going to be part of a turnaround for the company?

COVERT: It could be -- Sony's always made really great hardware, and so, you know, and this is, you know, in that tradition. You know, their software, you know, it's you know, their custom UI is not as good as stock Android, so that might be a point of contention for some people, but yeah - - I mean it's definitely another great piece of hardware from Sony.

STOUT: All right. Adrian Covert, CNN Money, thank you.

COVERT: Thank you.


STOUT: Adrian Covert of CNN Money talking to me earlier. Now, one of the big rumors before the show was that Nokia would unveil a tablet. So, I asked Nokia's CEO Stephen Elop whether the company is planning to release one.


STEPHEN ELOP, NOKIA CEO: We haven't made any announcements on tablets, but we're looking at that market very carefully. It's going through a lot of changes right now. So, of course, we're considering what's the right way to enter, if we were to enter, how do we differentiate in that market, how do we as confidently stand up with the tablet as we do with our Lumia smartphones. We want to make sure we understand all of that. And when we do, then maybe we'll have something more to say.


STOUT: Now, if that's not a confirmation Nokia is working on a tablet, then we can consider it a very strong hint. Now, one of the other big trends at the show is the presence of Chinese handset makers, both Huawei and ZTE. They have huge booths here. And are collecting their new place at the top of the industry. Now, both Huawei and ZTE, they broke into the top five in handsets, shipped in the first quarter of 2012. That's for smartphones, not just inexpensive, simple mobile phone handsets. Now, Huawei actually shipped more smartphones than anyone, any other than Apple or Samsung, but they were far behind those two.

Now, a "Fortune" magazine writer Michal Lev-Ram has been investigating the rise of Chinese smartphone makers and particularly Huawei and ZTE. She joins me live right here at the Mobile World Congress. Thanks for stopping by.

MICHAL LEV-RUM, WRITER, FORTUNE: Thank you for having me.

STOUT: Let's first talk about the Chinese smartphone market itself. Because it's the world's biggest.

LEV-RUM: It is.

STOUT: So, inside China, what are the top smartphone brands?

LEV-RUM: Huawei and ZTE are definitely two of the biggest. I mean, they've got a huge market share there. They're starting to have more market share abroad, but China is really there, you know, that's their sweet spot, that's their home market, and that's where they have all the grand presence and recognition.

STOUT: Yeah, and why is it that they're so successful in the domestic market? Home field (ph) advantage, you know, over Samsung or Apple?

LEV-RUM: It is. I mean, and China in particular -- it's hard cracking into the Chinese market. Just ask any tech company, not only on the handset side.

So, they can really tap into local taste, you know, the local distribution market, all of that. They just have the upper hand there.

STOUT: Now, they're planning to make, and they're making a big push overseas, and particularly in the U.S. market ...


STOUT: But especially for Huawei and ZTE, there is the trust issue. So, how are they dealing with that?

LEV-RUM: Well, in a few ways. I mean yes, it's a big issue. It's not just perception. There was this Congressional reports that came out last fall and basically label these two companies as security risks. So, not (ph) spend (ph) more (ph) on the telecom equipment side, because these companies, their bigger business, actually, for Huawei in particular is selling telecommunications equipment, but also on the (inaudible) tech side, and again, there is this perception problem. So they're trying to launch a lot of phones that will appeal to the American public, and they're also trying to just raise awareness, you know. Advertising campaign. Reach to the media, and all of the above, and they're really trying to clear their name and kind of clear those what they say are misconceptions.

STOUT: Advertising, marketing spent, lobbying ...

LEV-RUM: Lobbying.

STOUT: And also investment. And creating a lot of jobs near ...

LEV-RUM: R&D. Yes.

STOUT: R&D is a big one. So, do you think they'll able to succeed and do well in the U.S.?

LEV-RUM: You know, I don't know. I mean a few years ago, if you'd ask me would Samsung be such a hit in the U.S., I would have probably said no. So, you know, yes, there's a way to do it. But I think that they have a bigger uphill battle than Samsung did. As hard as it was for Samsung to get that kind of, you know, brand recognition in the U.S. and in another markets -- Huawei and ZTE, they are just -- they are complete unknowns for many Americans, many outside the China, really, and so I think that getting that -- to that household name is going to be a long, long, haul.

STOUT: Now, you've been playing around with the smartphones from these Chinese makers, and particularly one from Huawei. Tell me what was the experience like.

LEV-RUM: So, Huawei launched the Ascend P2, this is the 4.7 inch screen, it's an Android device, but they -- they basically put a layer on top of it so that their user interface looks a little bit different than your average like Samsung Android device. And they are touting it as the fastest smartphone on the market. I'm not sure if that's true.

STOUT: Yes. It's fast, but is it appealing to use?

LEV-RUM: It is. It is. I mean -- look, if you like Android, it's a similar look and feel. The 4.7 inch touch screen, like I said. A lot of these phones have very similar look and feel, so it's hard differentiating, and that's also -- that's not only their challenge, it's the challenge for every phone maker out there, how to differentiate.

STOUT: And the challenge ahead for Chinese smartphone makers, can they innovate? Can they really be creative just to make their mark? Do they have it in them?

LEV-RUM: I think -- I think they do. I think they have to. I mean this is no longer an economy where, you know, market where they can just get forward on manufacturing advantage, on a cost advantage, you know, they have to innovate. Everybody is manufacturing in China.



STOUT: Well, it's an interesting question -- could Huawei, could ZTE be the next Samsung? We shall see.

LEV-RUM: Some day. Maybe in a few years.


STOUT: Yeah. Thank you so much for joining us here.

LEV-RUM: Thank you.

STOUT: Enjoy the conference while you are here.

LEV-RUM: Thank you.

STOUT: All right. You're watching NEWS STREAM live from the Mobile World Congress here in Barcelona. Up next, in the gaming world, there are palm consuls, there are hand-held consoles. And later, we'll see how the distinction between the two is being blurred. Stick around.


STOUT: Welcome back. You're watching NEWS STREAM. And this week, our leading women show us how they give back, whether promoting the arts or helping children in need. They also share some lessons learned. Now, Becky Anderson. She sits down with Angeliki Frangou, who heads the Navios Maritime Companies, and Felicia Taylor visits singer/songwriter Daniela Mercury.


BECKY ANDERSON, CNN CORRESPONDENT: Angeliki Frangou's path to success in maritime shipping was inspired by a family history in the business. Dating back to her great grandfather. From her base just outside Athens, she heads the Navios group -- four shipping companies that transport goods all over the world.

ANGELIKI FRANGOU, NAVIOS GROUP CEO: As people (inaudible), they need infrastructure development, so they need steel, they need iron ore and coal, that these then turn to steel, to bridges, to buildings, to cement. And, then, of course, you have oil for powering these cities, that we again transport. And then we take the finished products that they produce and bring it back to the West.

ANDERSON: Though the Greek economy has been battered, Frangou says her company is strong. In her business, she says, it pays to think ahead.

FRANGOU: Shipping is a notoriously cyclical business. You have to have the ability to change and adapt to the new situations. If you don't do that, you will have problems.

(voice over): Look at these beautiful gold earrings.

ANDERSON: Frangou is not all business. She's got a passion for the arts, inherited from her mother, who taught classical studies.

She took me to the museum of Cycladic Art in Athens to show me an exhibit of antiquities about women.

FRANGOU: The history from all around Mediterranean, which at the time was very important.

ANDERSON: And what's amazing, is that, you know, times are hard in Greece at the moment. I wouldn't be surprised if our viewers were surprised to see an exhibition of this quality at this time, and yet it's here.

FRANGOU: I think this is amazing. This creates the optimism that we need.

ANDERSON: Optimism seems to be part of her core, and so is sharing her lessons learned with those she mentors. She recalls one incident.

FRANGOU: I (inaudible) prospectus. I spent time on that. But I missed the most important issue, which was timing. So, now the one thing I can say to everyone, is forget about the prospectus. You need to be a B. You don't need an A plus. But you need to be very correct on the timing. So monitor the timing.

ANDERSON: Wise words from this award-winning executive, mother and cultural enthusiast who plans to keep forging ahead.

FRANGOU: I feel I'm very young. My father is 87 and still working. So I can say I have another easy 40 years to work.


Daniela Mercury is still at the top of her game. The Latin music star began her career as a teenager. She counts winning a Latin Grammy Award in 2007 among her many achievements, but she admits, success and fame have come at a price.

(on camera): What were some of the hardest choices that you've had to make over the last couple of decades of being in this career?

DANIELA MERCURY, SINGER/SONGWRITER: Everything is sacrifice. I did a lot of sacrifice. But it was hard to me -- was to travel. And to leave my children at home.

TAYLOR (voice over): We spent time with Mercury at her home in Bahia on the Brazilian coast. Visible everywhere, signs of her love of family and her long career.

MERCURY: My first group -- it's me.

It was the carnival in 1993.

TAYLOR : Performing at carnivals has always been a highlight for Mercury, and so is samba music.

In Sao Paolo, we see how Mercury brings a bit of happiness. Here, she gives an impromptu music lesson to some youngsters at a foundation run by her friend and former footballer Cafu.

(on camera): Tell me what it's about and why you wanted to get involved.

MERCURY: I worked in the social area for years. I must -- I'm a daughter of a social worker. And my sister is a social worker, too. And it was very little, I have to be an example in home. My home always was open to receive people that needed some food and some help.

TAYLOR: She sees her efforts to help and inspire those in need in her country as part of her legacy.

MERCURY: I'm using this power to, obvious, to help and run (ph) to be our life better here in Brazil, and in other parts of the world.

TAYLOR: And nothing says more about Mercury than her music. A pop star who was always looking ahead.

MERCURY: They don't have any (inaudible) because what I did, I did. If I have the chance to come back after this life, I want to come back as a woman.


MERCURY: Because I love to be a woman, because we have more challenges and it's more fun.


STOUT: All right, (inaudible). Now, next month on Leading Women, the media moguls Arianna Huffington and Oprah Winfrey. For more on leading women, just log onto women.

This is NEWS STREAM live from Barcelona. We have more from the Mobile World Congress. Now, check this out. This is a portable controller that is ready to game wherever you go. Find out what makes it so different.


STOUT: Welcome back. Now, 18 tourists were killed when the hot air balloon they were riding in exploded over the ancient Egyptian temple city of Luxor. And three survivors have been hospitalized. The tourists were from Hong Kong,, Japan, Britain, France and Hungary.

Let's bring in some new pictures that were just coming into us from the Reuters news agency and Egypt's state-run news agency. They blame this crush -- the pictures of the aftermath of that crush -- they blame this crush on a gas explosion. Now, the provincial governor has banned all hot air balloon flights until further notice.

Now, the CEO of Yahoo!, Marissa Mayer, she was given the task of changing the company's direction, and now some employees will have to take a very drastic move. Mayer, she sent a memo giving telecommuters until June to get back into the office or leave. Lisa Sylvester has the story.


LISA SYLVESTER, CNN CORRESPONDENT: Marissa Mayer, named one of "Fortune" magazine's most powerful women, says she has to ruthlessly prioritize.

MARISSA MAYER, CEO, YAHOO!: For me, it's God, family and Yahoo!, in that order.

SYLVESTER: Mayer, who famously or infamously, depending on who you ask, returned to work two weeks after giving birth, is shaking up the debate over work-life balance issues.

In this memo, first obtained by the tech blog, "All Things D, "Yahoo!'s human resources director outlines a new policy -- no more working from home. Quote, "To become the absolute best place to work, communication and collaboration will be important. So, we need to be working side by side. That is why it is critical that we are all present in our offices." Workers currently telecommuting have until June to either get comfy working out of the office, or leave.

Yahoo!'s new policy was ripped by some commentators. Richard Branson, CEO of Virgin, said the decision seems backwards. At a time when remote working is easier and more effective than ever. Adding quote, "Yours truly has never worked out of an office, and never will." Blogger Lisa Belkin, writing for the "Huffington Post," sees it as a direct dig against working parents.

LISA BELKIN, HUFFINGTON POST: I think it's backwards. I think it's the opposite of what she should have done.

SYLVESTER: And CEO Eric Holtzclaw of marketing company Laddering Works says not only does he let his employees work from home, he logs time away from the office as well.

ERIC HOLTZCLAW, CEO, LADDERING WORKS: I'm always more efficient when I work from home. And working from home or working from a third location. So, I do a lot of writing, and I think that if you work in a coffee shop and some of those kind of places, you'll get more inspiration.

SYLVESTER: Mayer is bucking the trend. 9.5 percent of workers worked from home at least one day a week in 2010. That's up from seven percent in 1997. But her decision doesn't come out of the blue. She came from Google, a company that likes the collaborative atmosphere when workers have face to face time, and she's in the middle of a turnaround for Yahoo!

We reached out to Yahoo!, but the company declined to comment. The Web site Business Insider did talk to some Yahoo! employees, and not all of them are upset.

ALYSON SHONTELL, BUSINESS INSIDER: It was getting way too lenient, and people weren't using their best judgment, necessarily, with working from home versus working in the office, to the point that some of them didn't even realize their colleagues still worked for Yahoo! They were coming in so infrequently or not at all.

SYLVESTER: It's surprising, though, because it's coming from Yahoo! Tech companies have been trailblazers when it comes to telecommuting. Take Cisco, for example. 90 percent of its workers work from home at least one day a week. Lisa Sylvester, CNN, Washington.


STOUT: So, a ban on telecommuting. Now, that has become a bit of a talking point here at the Mobile World Congress. I actually asked (inaudible) Greg Sullivan about it, and he talked about how he got a call from Steve -- as Steve Ballmer, the CEO of Microsoft -- while watching his daughter's soccer game. But he thought that was a good thing, because he got to watch the game.

Now, let's talk about something called Project Shield, which, if you think about it, is a strange name for a device designed for open platforms. Nvidia says it will let gamers play what they want, where they want. I spoke to director of product marketing, Jason Paul.


JASON PAUL, NVIDIA PRODUCT MARKETING DIRECTOR: So, this is our new mobile gaming portable. We announced it about a month ago. We are showing it off here at Mobile World Congress. It's based off of our Tegra 4 (ph) processor, which is our brand new processor that offers about three times the performance of prior generation. Now, we built the device around this controller, to give gamers the precision and control, but in a mobile form factor.

STOUT: You know, I'm not a gamer, OK? But I pick it up, and I feel it. It feels like a really ergonomically designed controller. Tell me more about the thinking that went into the hardware design.

PAUL: Absolutely. When we designed it, we wanted people to pick it up, and it was immediately familiar. People play games in their living room, on game consoles, so we designed it, so they pick it up. I know how to use this device, it's very familiar to me and you can just sit there and enjoy your games.

STOUT: Why is Nvidia doing this?

PAUL: Well, because from a technology perspective, we have all the technology to make this possible.


PAUL: We have the processor, we have a lot of the software and Android technology that we've built, and we're a gaming company at heart. So being able to bring all these pieces together to deliver a new mobile gaming platform, which is something that we felt we could do best.

STOUT: You're doing this because you can do it.

PAUL: Absolutely.

STOUT: And you can do it best in your words. Would you ever launch a home gaming console?

PAUL: Well, this is -- this is to some extent a home gaming device. It has an HDMI cord, you can hook it up to your big screen and play games on your big screen as well. So we thought something that you can enjoy in your home, with this device sitting on your coach, on your bed, hooking up to your TV, or you can take it on the road with you, on a plane trip, in the car. That was -- that was our approach.

STOUT: You know, home gaming consoles usually last a few years. But when you look at games, and sort of the graphical power of smartphones, that's evolving a lot more quickly. So, are you going to have to upgrade this more quickly?

PAUL: Well, so with this device -- it's an open platform approach, it's a little bit different from the traditional consoles that last for five or six years. And we have new Tegra products that come out on about an annual cadence. So we can bring the latest and greatest technology to gamers along with our new processors.

STOUT: Who is your rival? Nintendo or Apple?

PAUL: Well, I think this is kind of a unique device. And there's definitely a lot of people in the ecosystem from the guys who are making the consoles to even just your typical Apple or Android tablets. But really, we see this as a unique device that's aimed at both Android gamers who want to get a better experience than they can get on a tablet or smartphone. And also, PC gamers, because one of the cool features of this device is that you can stream games over your home WiFi network from your PC to the device. So, instead of having this set in front of your PC, you can sit on your coach and play your PC games. That are - that may be upstairs in the bedroom. So, we're really after (ph) those two audiences, and we think this is going to be a great gaming device for them.

STOUT: Now, the smartphone industry is moving so fast.

PAUL: Absolutely.

STOUT: So, here's your casting (ph). What's next in terms of mobile gaming? What's next after this?

PAUL: So, this -- so, we're going to bring more performance so you can get better graphics fidelity and really just continue to raise the bar on the gaming experience. Being able to get better WiFi, 4 GLTD (ph) so you can take it outside of your home and get, you know, stream gaming experiences outside of your home. There's just a ton of technology coming in the next years, and we're going to bring it all into this device.


STOUT: All right. Jason Paul of Nvidia there. And remember, we are here, at the Mobile World Congress until Thursday, and tomorrow we will continue our look at the industry when we talk to BlackBerry. There is also - we'll be talking to the CEO of the location-based social network FourSquare. That and more on the Wednesday edition of NEWS STREAM, live from here, the Mobile World Congress in Barcelona.

And that is NEWS STREAM. The news continue at CNN. "WORLD BUSINESS TODAY" is next.