Danny Puff

By Zorianna Kit

LOS ANGELES (Reuters) - Actor Zachary Quinto has transitioned swiftly from a television villain into an unlikely action film star in J.J Abrams' rebooted "Star Trek" franchise, playing the series' most recognizable half-Vulcan, Spock.

The 35-year-old actor, who gained fame as super-villain Sylar in sci-fi television series "Heroes," will reprise his role as the pointy-eared first officer of the starship Enterprise in "Star Trek Into Darkness," which will be released in theaters on Friday.

The actor spoke to Reuters about the challenges of playing Spock and why he chose to go public about being gay.

Q: "Star Trek Into Darkness" has more action, set pieces and destinations than the 2009 reboot. Is that right?

A: You're right. It's a larger scale version of the "Star Trek" story. The first one was about re-conceiving people's perceptions of "Star Trek," and trying to infuse it with new energy. The self-contained and more intimate nature of that film made sense. Now, people are more familiar with us as these characters so this movie builds on that and expands on it.

Q: What is Spock struggling with in this film?

A: I think he's learning how to be accountable and responsible to the people he loves and cares about. He is learning to embody and live the qualities of what it means to be a friend and what it means to be responsible to other people emotionally, because that's not the place from which he leads. He needs to learn how to integrate that part of himself and honor the feelings he has for the people he loves.

Q: What do you learn from Spock on a personal level?

A: I have an inherent understanding to his nature, which is one of duality - the head versus the heart. That is certainly something I can relate to. As someone who has been considered pretty intellectual and wordy, I also have a deep well of emotional life. I understand what it means to be in constant relationship to both of those aspects of myself.

Q: Which of Spock's qualities do you aspire for yourself?

A: The equanimity with which he deals with every situation in front of him, and the thoughtfulness and care he gives to measure his reactions. Sometimes I can be a little extreme in my reaction to something. I respect his reservedness and pensive consideration, which is an aspect of me but outweighed by my instinctual or impulsive reactions to things sometimes.

Q: In this film you're jumping into volcanoes and off of barges. You're fighting, running, chasing. Did you ever think of yourself as an action star?

A: I can't say I ever planned on that. But I will say I really thrived in that environment. I enjoyed those specific challenges and the relentlessness of it. I don't necessarily know I want every movie to be that way, but I wouldn't mind revisiting that again at some point down the line.

Q: How close are you with the cast?

A: We are very, very good friends in real life. When the first movie happened, it was a life changing experience for all of us. We were going through it at the same time and relied on each other for support and for the excitement of that time. That energy is starting to kick back up again. We look forward to spending time together on these extended periods where we're traveling around the world.

Q: You used your "Star Trek" clout to form a production company, Before the Door Pictures, whose first film, 2011's "Margin Call," was nominated for a best screenplay Oscar. Did that change things for you?

A: I think "Margin Call" did similar things for my production company that "Star Trek" did for me as an actor. The way that film was received really did authenticate my company and allowed us more access and more connections than we might have had otherwise.

Q: In between the two "Star Trek" films, you made some headlines when you said you were gay. Was coming out a big deal?

A: It was obviously a very big deal. It wasn't about formality or stopping rumors because I don't really pay attention to rumors in the first place. It was a very specific move that I made because there was a rash of teen suicides at the time (the victims were gay).

Q: How did that relate to you?

A: I felt it incumbent upon me to do something about that if it was in my power, which is was. So for me that was a very specific and emotional time. I felt very grateful for the response that it generated and the work on behalf of the LGBT community it has allowed me to do subsequently.

Q: Some actors feel that by coming out it could impact the roles they get to play. Did you feel it hindered your career?

A: Not one bit.

(Editing by Piya Sinha-Roy, Patricia Reaney and Vicki Allen)

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LONDON (Reuters) - British singer George Michael has received medical treatment after a car crash on Thursday, his publicist said.

The 49-year-old former Wham! frontman was being treated for "minor cuts and bruises" after the accident, Michael's spokeswoman said.

"George Michael was a passenger in a vehicle involved in a traffic accident yesterday evening, no third party was involved," a spokeswoman said on Friday. "He is being treated for superficial cuts and bruises but is fine."

British media reported that the accident occurred just outside London on a motorway during rush hour.

The "Careless Whisper" singer has suffered a string of accidents and health scares recently.

Last year he canceled his tour of Australia due to "major anxiety" brought on by a 2011 battle with severe pneumonia in Vienna, where he was treated in intensive care for a month for a life-threatening illness.

Michael has sold an estimated 100 million records over his career, but has hit headlines in recent years for his personal life more often than for his music.

In 1998 he was arrested in California for "engaging in a lewd act" in a public toilet and also had a number of run-ins with British police for possession of narcotics. He served a term in jail for driving under the influence of cannabis.

(Reporting by Paul Casciato; editing by Mike Collett-White)

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By Miyoung Kim

SEOUL (Reuters) - Overtaking Apple Inc as the world's leading maker of smartphones has stretched Samsung Electronics Co's in-house supply lines, and the South Korean firm is now courting some of its rival's main parts suppliers.

After costly courtroom battles over technology patents, the two gadget giants are now going head-to-head over securing the best supply of parts as they jostle to rule the $253 billion smartphone market. The two took 100 percent of the industry's profit in January-March, Canaccord Genuity data show.

Trampling on Apple's supply patch could make life tough for the U.S. firm as it prepares for its next product line-up including a cheaper iPhone for emerging markets such as China. Having Samsung muscle in on its suppliers could drive up costs and lead to component bottlenecks, disrupting product launches.

Samsung's huge in-house supply chain - providing parts from displays and powerful processors to memory chips and batteries - has been a core strength in its war for smartphone supremacy. As it now looks to widen its lead with products spanning both the high and cheap-and-cheerful ends of the market, Samsung's supplies have become stretched, prompting it to hunt elsewhere to ensure it isn't caught short.

"The next round of the post-patent battle for them will be over component supplies," said Lee Sun-tae, an analyst at NH Investment & Securities. "Who wins access to the best performing components in class in large quantity - that's the key ... and explains why Samsung is shopping for components more than ever."

SHARP AND SOUR?

Samsung has made overtures to traditional Apple partners such as Japanese display maker Sharp Corp and South Korean chipmaker SK Hynix. Samsung, which buys most of its mobile screens from its Samsung Display unit, last year placed orders with Sharp for high-resolution LCD screens for its popular Galaxy range of products, though it later canceled the order, said two people familiar with the matter, asking not to be named as the negotiations were confidential.

Sharp, in which Samsung bought a 3 percent stake earlier this year for $110 million, said this week it was seeking to boost sales to the Korean firm, potentially souring the Japanese company's ties with Cupertino, California-based Apple.

Samsung is also using more chips made by Qualcomm, another major Apple supplier, in its flagship Galaxy S, which went on sale late last month.

Some other suppliers who provide parts to both Apple and Samsung include Toshiba Corp in NAND memory chips, Sony Corp, in image sensors, and Corning Inc for its Gorilla Glass used in iPhones, iPads and Galaxy products, industry data show.

STMicroelectronics and Bosch, the only mass producers of pressure sensors used in navigation features, supply those parts for the Galaxy range, and could be tapped by Apple for future products, according to research firm iSuppli.

TINY OVERLAP, BIG IMPACT

For sure, Samsung still buys the majority of its components in-house, and the overlap with Apple on external suppliers is, so far, limited. BNP Paribas estimates that more than 80 percent of component profits generated by Galaxy S4 sales go to Samsung itself and its units.

But even a tiny overlap can be damaging as smartphones are constantly upgraded to more powerful computing and media devices - allowing users to take pictures, shoot video, play music, game online, watch TV and navigate - raising the need for more and smarter components.

"Any disruption in even small parts that you wouldn't think are really core, say headphones, can affect product launches," said Lee at NH Investment & Securities.

For example, Taiwan's HTC Corp, which has slipped out of the top-10 smartphone makers, reported a record-low quarterly profit last month after delaying the full launch of its flagship model due to a shortage of cameras.

"Having a single supplier carries a lot of risk. Bearing that in mind, Samsung may even consider using LCD along with OLED in its signature Galaxy S range to reduce its total reliance on Samsung Display," said Song Jong-ho, an analyst at KDB Daewoo Securities.

Samsung Display doesn't produce LCDs for smartphones so as it boosts sales at the lower end of market it needs to outsource LCDs. The Korean firm uses the more expensive OLED display only on its high-end models.

NOT SO DIFFERENT

Outsourcing more components could mean Samsung will lose some of its hardware differentiation - a big selling point for the Galaxy range - and be seen as just selling generic phones, say some analysts.

The Exynos 5 Octa processor, which Samsung touted as having 8 brains designed to maximize energy efficiency while multi-tasking, is not used in the S4 models sold in the United States. Instead, Qualcomm's Snapdragon chips will power the phone in that crucial market, with Exynos chips used in select markets such as South Korea and some European countries.

"Given that Qualcomm chips are also found in rival products, and the much-heralded launch of smartphones with flexible display appears to be delayed, I'm worried Samsung is losing its hardware differentiator," said BNP Paribas analyst Peter Yu.

Samsung says both Qualcomm and its own chips have passed its rigorous quality standards and both will provide satisfactory user experience. "We'll continue to resort to multi vendors to ensure smooth supply," Kim Hyunjoon, vice president of Samsung's mobile business, told analysts on a recent earnings call.

Samsung's Exynos processors accounted for around 30 percent of the S3, but that is likely to fall to around 10 percent in the S4, analysts said.

"Qualcomm's latest chips are getting good reviews from carriers, which I think forced Samsung to switch in favor of Qualcomm from Exynos in the S4," said KDB Daewoo's Song. "There's even a possibility Apple may drop its own processor and go for Qualcomm chips in some future devices."

FLEXI-TIME?

Losing some of its hardware appeal and taking longer than expected to come up with innovative products such as flexible or wearable devices are additional challenges for Samsung, which is getting only mixed reviews for its efforts to improve software capability to integrate better with hardware.

In a recent review of the S4, Walt Mossberg, a gadget expert for the Wall Street Journal, said Samsung's software was "often gimmicky, duplicative of standard Android apps, or, in some cases, only intermittently functional.

Despite the lukewarm reviews, consumers keep snapping up the S4, according to carriers. For the first time in at least three years, Samsung last year spent more on marketing than on research and development, seeking to pick up market share in the absence of new, competing models from Apple. And Samsung's operating profit is seen topping Apple's this quarter for the first time in years, J.P. Morgan analysts predict.

"There's not much left in terms of what you can do to really differentiate your product as everybody's thinking something similar - flexible or wearable," said NH Investment & Securities' Lee.

In late 2011, Samsung told analysts it planned to introduce flexible displays on handsets "some time in 2012, hopefully the earlier part than later", but a year later it said the technology was still "under development." It again demonstrated prototypes of flexible phones earlier this year, but executives now say they can't disclose the timing of flexible smartphones.

Rivals are also moving fast. LG Electronics Inc, the third-biggest smartphone maker in January-March on strong sales of its high-end Optimus G model, said last month it planned to introduce an unbreakable smartphone by the year-end.

(Additional reporting by Mari Saito and Reiji Murai in TOKYO; Graphic by Catherine Trevethan; Editing by Ian Geoghegan)

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By Patrick Temple-West and Kevin Drawbaugh

WASHINGTON (Reuters) - Apple Inc Chief Executive Tim Cook made no apology on Tuesday for the iPad maker saving billions of dollars in U.S. taxes through Irish subsidiaries and told lawmakers that his company backs corporate tax reform, even though it may end up paying more.

The Senate Permanent Subcommittee on Investigations has found that Apple in 2012 alone avoided paying $9 billion in U.S. taxes, using a strategy involving three offshore units with no discernible tax home, or "residence."

Cook, in his first congressional testimony since becoming Apple CEO in 2011, said his company is a major taxpayer, handing over nearly $6 billion in cash to the U.S. government in 2012.

"We expect to pay even more this year," Cook said. "We pay all the taxes we owe."

But Senator Carl Levin, chairman of the subcommittee and a veteran tax sleuth, said Apple had sought "the Holy Grail of tax avoidance," creating one Irish unit that paid no income taxes to any national tax authority for the past five years.

Levin said Apple used Ireland as a base for a web of offshore holding companies and negotiated a deal with the Irish government for a tax rate of less than 2 percent. The top U.S. corporate tax rate is 35 percent, one of the world's highest.

Cook said Apple did not depend on tax gimmicks. "We don't move intellectual property offshore and use it to sell our products back to the United States to avoid taxes. We don't stash money on some Caribbean island," he said.

In Ireland, where low corporate taxes have been an economic development tool for many years, the government said it had not made a special tax deal with Apple. If Apple's tax rate was too low, it was the fault of other countries, deputy prime minister Eamon Gilmore told national broadcaster RTE on Tuesday.

White House spokesman Jay Carney said on Tuesday that President Barack Obama "thinks it is inexplicable that our tax code would actually be written in a way that rewards companies for taking jobs and profits offshore."

HP, MICROSOFT PRECEDED APPLE

Subcommittee staffers said on Monday that Apple was not breaking any laws and had cooperated fully with the inquiry.

Levin's panel has previously examined what it called tax avoidance by other U.S. technology giants, including Hewlett-Packard Co and Microsoft Corp. The senator said Apple has used similar tax avoidance strategies.

Senator John McCain praised Apple as a success story, but he said the company's tax strategy reflected a "flawed" tax system.

"For years, Apple has opted to forego fully contributing to the U.S. Treasury and to American society by shifting profits and circumventing U.S. taxes," McCain said.

Cook said Apple agreed with those in Congress who want to reform corporate taxes and called for changes that include lower corporate income tax rates and a reasonable tax on foreign earnings.

"Apple recognizes these and other improvements in the U.S. corporate tax system may increase the company's taxes," he said in prepared testimony.

Many U.S. multinationals take advantage of a tax law that allows profits earned abroad to be tax-free as long as they are not brought into the United States, or "repatriated." Total U.S. corporate profits parked offshore rose 15 percent to $1.9 trillion last year, according to research firm Audit Analytics.

Taking advantage of this law and others, the offshore earnings of U.S. companies have risen 70 percent in the past five years, Audit Analytics said two weeks ago.

"The baldness of the Apple strategy surprises me more than anything else," said University of Southern California Law Professor Edward Kleinbard. "European member states are going to be very angry with Apple and very angry with Ireland."

OFFSHORE MANEUVERS

Offshore profits are typically taxed by the countries in which they are earned, but companies work hard to move offshore profits into countries with lower tax rates, like Ireland.

One way this is done is through "transfer pricing," or the management of moving goods and services across international borders from one corporate unit to another. Sometimes companies move valuable intellectual property to a low-tax country, then bring profits derived from its use into that country through royalty payments and other structures.

Levin's panel said Apple used a cost-sharing agreement "to transfer valuable intellectual property assets offshore and shift the resulting profits to a tax haven jurisdiction."

Assessing taxes on these arrangements is one of the biggest challenges facing U.S. tax collectors, said Mark Mazur, assistant secretary for tax policy at the Treasury Department, who testified after Cook.

The panel also said Apple took advantage of loopholes in tax law and regulations known as "check the box" and "look through" that let some offshore units be disregarded for tax purposes, sheltering substantial profits from taxation.

Levin has unsuccessfully called for closing the "check the box" and "look through" provisions of the tax code.

The Levin inquiry comes at a turbulent time in tax circles, with the U.S. Internal Revenue Service under investigation because of the way agents handled conservative political groups' applications for tax-exempt status.

It is not clear, however, whether that controversy and Levin's allegations will lead to an overhaul of the U.S. tax code. Tax law writers in Congress had been inching forward on such a project before the IRS scandal erupted earlier this month. Levin's inquiry has been under way for months.

Shares of Apple closed down 0.7 percent at $439.66 on Tuesday.

(Additional reporting by Roberta Rampton in Washington, Tom Bergin in London, Conor Humphries in Cork, Padraic Halpin in Dublin; Writing by Kevin Drawbaugh; Editing by Lisa Von Ahn and Tim Dobbyn)

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(Reuters) - Pop stars Justin Bieber and Taylor Swift won the big prizes on Sunday at the Billboard Music Awards, which also honored legendary performers Madonna and Prince.

Bieber, who was named top male artist, also performed at the show at the MGM Grand Garden Arena in Las Vegas. He also took home Billboard's first Milestone Award, chosen by fans, for musical innovation and ingenuity.

"I'm 19 years old. I think I'm doing a pretty good job, Bieber said. "It should really be about the music. This is not a gimmick. I'm an artist and I should be taken seriously. And all this other bull should not be spoken of."

The teen heartthrob did not elaborate, but in recent months he has been involved in several high-profile incidents ranging from driving offenses to reports of hard partying and drugs being found on his tour bus in Sweden.

Swift won the top award of the night, artist of the year. She thanked her fans by telling them: "You are the longest and best relationship I've ever had."

Pop diva Madonna was named top touring artist for her "MDNA Tour," 2012's highest-grossing concert series.

Madonna strode onstage to accept the accolade from will.i.am, wearing black fishnet stockings, garters and a padlock choker.

The MDNA tour grossed more than $305 million from 88 sold-out shows and attracted an audience of 2.2 million people. Madonna acknowledged her fans, saying: "A showgirl needs her fans. Thank you for supporting me for three decades."

She also thanked her four children for being "incredibly supportive."

The Billboard Music Awards, hosted by "30 Rock" star Tracy Morgan, opened with Bruno Mars performing "Treasure."

Early awards went to Macklemore and Ryan Lewis, who won top rap song for "Thrift Shop," and Nicki Minaj, who took home the top rap artist honor.

Carly Rae Jepsen's "Call Me Maybe" was named top digital song, while Swift took home the top Billboard 200 album award for "Red."

French producer and DJ David Guetta was named top electric dance music artist.

Among musical highlights, Bieber performed "Take You," which was chosen by his fans via Twitter, before pairing up with will.i.am for "#ThatPOWER."

Other musical pairings included Jennifer Lopez and Pitbull singing "#LiveItUp," Minaj and Lil Wayne who performed "High School," and Christina Aguilera and Pitbull singing "Feel This Moment."

Selena Gomez, Chris Brown, Icona Pop, South Korea rap sensation Psy and Swift, who was nominated for 11 Billboard awards and received eight, performed as well.

In an apparently unscripted moment, Miguel, performing "Adorn," leapt from the stage and landed feet-first atop two young women. No mention was made on the broadcast as to whether they were injured.

The show ended with the Icon Award for Prince, in recognition of his unique career and accomplishments in the music industry. Prince performed a medley to close the show, but did not deliver an acceptance speech.

(Reporting by Chris Michaud; Editing by David Brunnstrom and Stacey Joyce)

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CANNES, France (AP) A phrase you will hear often at Cannes is: "Let me run the numbers."

The commercial underbelly of the Cannes Film Festival is a nonstop frenzy of deal-making in luxury hotels along the Croisette promenade and aboard yachts moored offshore. Films are pitched with various ingredients a director, a script, a few stars as agents and talent pursue international investors and domestic distributors to bankroll their movies.

For director James Toback, any claims about the running of "the numbers" of treating moviemaking as an analytical science is blatant "pseudo research."

"This is where you really need, desperately, a sense of your own value," Toback said in a recent interview. "A sense of your own value as a person and an artist."

A year ago, Toback swam through Cannes' sprawling marketplace with cameras and Alec Baldwin in tow, documenting the painful, sometimes humiliating process of trying to get a movie funded at Cannes. He and Baldwin returned to the Cote d'Azur festival Tuesday to premiere the product of that shooting, "Seduced and Abandoned."

Even for Toback, a veteran director whose career has ranged from his 1974 debut "The Gambler" to the 2008 Mike Tyson documentary "Tyson," and Baldwin both of whom know well the ways of Hollywood witnessing today's financing process was a sobering experience.

"It's worse than I thought," says Toback. "It's tougher than I thought. The reasons not to do (a movie) are more blatant. And also the flip-of-the-coin idiocy with which decisions are made. There is a pretense of coherent value. There's a kind of Ponzi scheme at work, where people like to believe that they're acting from some sort of covert intelligence."

Baldwin, who has contemplating reentering the film business full-time following his run on the successful NBC TV comedy series "30 Rock," also finds the current film business daunting.

"The movie business is tough, and it's tougher now than ever," he said sitting on a terrace off the Palais, the center of the festival. "Sometimes I wonder if I'll ever make another movie again."

The Cannes market has grown to be the world's largest for the buying and selling movie projects. For decades, it's been standard practice to begin bankrolling a film by first selling international distribution rights. In recent years, Hollywood studios have focused increasingly on major blockbusters with enormous marketing budgets, leaving less room for mid-budget dramas.

"Seduced and Abandoned," which HBO picked up ahead of its Cannes premiere, begins with a quote attributed to the late director Orson Welles: that 95 percent of his life is spent trying to raise money for movies, and 5 percent is actually making them.

"It's no way to live," said Toback.

To capture the reality of the process, Toback and Baldwin ("the Ed McMahon to his Johnny Carson," says Baldwin) last year went around Cannes pitching a film, to be directed by Toback and to star Baldwin and Neve Campbell.

They proposed a version of Bernardo Bertolucci's notorious "Last Tango in Paris," to be titled "Last Tango in Tikrit" that would feature the same "exploratory sex" of the 1972 Marlon Brando original. (Although many later assumed the project was charade for the documentary, Toback insists he still hopes to make it.)

They set out hoping to make the film for $15 million to $20 million, but most people they interviewed tell them it's more likely a $3-5 million project. ("I'm too old for that," says Toback.)

It would be better, too, if they could get a bigger-name actress, they were told. One financier suggested that Baldwin go back to submarine films like "The Hunt for Red October." Another called him a "TV actor."

"The film has to be two things," says Baldwin. "It has to be Jimmy and I humbling ourselves trying to sell a movie here and it is humbling. And then some sort of homage to Cannes."

It also pays homage to movies in general. Interviewed about their irrational love of film are Francis Ford Coppola (who says cinema is "given by the gods"), Roman Polanski, Martin Scorsese, Ryan Gosling, Bertolucci and Cannes director Thierry Fremaux. They're all there to make a case for what Toback calls "the mysterious, intuitive process" of moviemaking.

"Seduced and Abandoned" takes on an elegiac tone of nostalgia complete with a booming score by the late Russian composer Dmitri Shostakovich for the older, more daring days of the movie business.

Shot in a blitz at Cannes, Toback had to figure out much of the film once he got home. They did additional shooting to tie things together after being rejected from the Sundance Film Festival earlier this year.

But Toback says he can't imagine having a better time making a film. Baldwin says it was "exhilarating."

"I would just assume go make more documentaries like this with Jimmy," says Baldwin, who also recently signed on as producer of "Elaine Stritch: Shoot Me," a documentary about his "30 Rock" co-star. "Let's take some iconic tableau in society the Super Bowl, a murder trial . the Country Music Awards. We'll think of something that's just a world unto itself and go and make a documentary."

"We'll see," he adds with a grin. "He and I have some ideas."

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Follow AP Entertainment Writer Jake Coyle on Twitter at: http://twitter.com/jake_coyle

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LOS ANGELES (AP) -- It's almost time for a new Xbox.

Eight years have passed since Microsoft unveiled the Xbox 360, double the amount of time between the original Xbox debut in 2001 and its high-definition successor's launch in 2005. With the next-generation Xbox expected to be revealed Tuesday, anticipation for the entertainment console's latest evolution is higher than Master Chief's spaceship.

"People get excited about new consoles because consoles represent the future," said Stephen Totilo, editor of gaming site Kotaku.com. "When you buy a new console, you're essentially investing in five years of your future in the hopes that this box won't just be cool the day you buy it, but in five years from now, it will be even cooler."

The platform has been the exclusive home to such popular gaming franchises as sci-fi shoot-'em-up "Gears of War," racing simulator "Forza" and first-person shooter "Halo," starring super-soldier Master Chief. In recent years, Microsoft expanded the console's scope beyond just games, adding streaming media apps and the family-friendly Kinect system.

The next generation of gaming already got off to a rocky start last November when Nintendo launched the Wii U, the successor to the popular Wii system featuring an innovative tablet-like controller yet graphics on par with the Xbox 360 and Sony's PlayStation 3. Nintendo said it sold just 3.45 million units by the end of March, well below expectations.

Microsoft will likely take aim at Sony during Tuesday's next-generation Xbox unveiling at its headquarters in Redmond, Wash. Sony was first to showcase plans for its upcoming PlayStation 4 but not the actual box at an event in New York last February. The reaction to that console, which featured richer graphics and more social features, was mixed.

Totilo said to wow gamers with the next Xbox, Microsoft must show off great games for it that players will crave, as well as technology that feels futuristic. He said there's concern from Xbox fans that Microsoft has lost interest in hardcore gamers with their recent efforts to attract casual gamers with the Kinect, its camera-based system that detects motion.

There will be at least one hardcore game showcased at the Microsoft's event: "Call of Duty: Ghosts," the next chapter in the popular military shooter franchise from "Modern Warfare" developer Infinity Ward. Activison-Blizzard Inc. previously announced that "Ghosts" would be on display Tuesday and will be available for both current and next-generation consoles.

"They wanted 'Call of Duty' on their stage to show off what next gen is capable of," said Eric Hirshberg, CEO of Activision Publishing. "We're excited about the approach that both Microsoft and Sony are taking to the next generation. Our business, of course, depends on them launching this new hardware, so we want to do everything we can to help."

For the past five years, questions and rumors about a new Xbox have circulated more than the chainsaw on the end of a "Gears of War" rifle. What will the new Xbox be called? How much will it cost? Will it play used video games? Blu-ray discs? Will it be backwards compatible? Must the Kinect always be on? Will it require a connection to the Internet?

It's that rumor about an always-on Xbox which has ignited the most negative comments on social networks, according to research firm Fizziology. Overall, Fizziology said gamers seem to be more jazzed about a potential new Xbox, with 32 percent of the chatter positive compared to 10 percent of the sentiment negative in online conversation.

"I think because people have been waiting a long time, expectations are higher," said Laurent Detoc, North America president of Ubisoft Entertainment. "As a result, they may not be seeing what they anticipated. In the end, from the research we've done, there's a strong appetite for new machines. I have no doubt they're going to sell extremely well."

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Online:

http://www.xbox.com/

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Follow AP Entertainment Writer Derrik J. Lang on Twitter at http://www.twitter.com/derrikjlang.

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By Malathi Nayak and Bill Rigby

SAN FRANCISCO/SEATTLE (Reuters) - Microsoft Corp is set to make a splash this week with the eagerly awaited unveiling of its new Xbox game console, eight years after the last version, as it seeks a larger share of the $65 billion a year global computer gaming industry.

But the small device faces some big competition from the PlayStation 4 by Sony Corp and the Wii U by Nintendo Co Ltd in a shifting market.

Gamers are gravitating to online play - suggesting the hey-day of console games are over - while Microsoft wants its sleek new toy to finally cross the bridge to the mainstream and become the family's entertainment center.

"Core gamers are very hungry for a new machine but the difference between 2005 and now is that the stakes are so much higher," said Ryan McCaffrey, executive editor at entertainment website IGN.com, harking back to Microsoft's last Xbox release. "The entire Xbox experiment from Microsoft was for it to be the center piece of your living room."

To that end, industry-watchers are expecting a raft of improvements from the new Xbox, when Microsoft unveils it at its Redmond, Washington, headquarters on Tuesday, from closer integration with the TV and link-ups with mobile devices to access to new and even exclusive content.

Console gaming still takes the lion's share of a growing gaming market - about 42 percent of the $65 billion world market, according to Microsoft. But playing games on smartphones and tablets, or as an offshoot to online social networks, is gaining ground fast.

Console sales have been in decline for the last four years, chiefly because of aging devices, but the first of the new generation of machines has not reignited the sector.

Nintendo's Wii U, launched in November, had sold only 3.45 million units through the end of March, well below the company's initial forecast of 5.5 million. Hopes for Sony's PS4, teased in March, are low key.

"The next wave crest isn't as high as the previous one," said Lewis Ward, research manager at International Data Corp, who calculates that about 250 million Xbox 360, Sony PlayStation 3 and Nintendo Wii units were sold between 2005 and 2012.

"I do think that consoles as a product category have peaked and the next gen devices won't match those totals," he said.

LOW MARGINS

The Xbox itself is not a key financial factor for the world's largest software maker. Its Entertainment & Devices unit is set to break $10 billion in sales for the first time this year, but that's half the sales of its Windows unit, and a lot less profitable, averaging less than 15 percent margin compared to 60 percent or higher for Windows or Office.

The company has more than 46 million members who subscribe to its online gaming and digital entertainment service Xbox Live, but that's still a fraction of the people who pay for its software.

However, the Xbox is still a key weapon in Microsoft's strategic battle with Google Inc, Apple Inc, Amazon.com Inc and others for a central place in consumers' lives.

"This (the new Xbox) is of massive importance to Microsoft. It is a piece of a larger war for the consumer that it is battling. They want to be fully integrated with the consumer whether it's in the living room or mobile," said P.J. McNealy, CEO and founder of Digital World Research. "Arguably the battle against both Apple and Google for dominating a consumer's time share more so than taking on Sony and Nintendo directly."

That means Microsoft will be aiming for many markets at the same time, from the core and casual gamer to the TV watcher and music fan.

To do that, industry watchers expect Microsoft to integrate the new Xbox much more closely to the TV and cable or satellite box, perhaps allowing users to change channel or buy movies with a wave of the hand through its motion-control Kinect sensor. They also expect to hear more about SmartGlass, Microsoft's app that lets you link an Xbox to a tablet or smartphone.

Users can already get Netflix through the Xbox, and Microsoft recently started its own studio to produce exclusive content, meaning the new device is a gateway to much more than games.

"I think they're going to try to have their cake and eat it too - they will try to get casual people for entertainment while keeping the hardcore gamers interested," said McCaffrey at IGN.com. "They want their console on all the time, whether it's a mom watching Amazon video, the son playing a game and the dad watching (Major League Baseball) TV on another app - that's their goal."

(Additional reporting by Edwin Chan; Editing by Lisa Shumaker)

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By Jane Lee

SHANGHAI (Reuters) - Humor may not always translate well, but Jon Stewart is picking up millions of fans in China, where his gloves-off political satire is refreshing for many in a country where such criticism is a rarity - especially when directed at their own leaders.

A recent segment on North Korea scored over 4 million views on microblogger Sina Weibo, and even stodgy state broadcaster CCTV has used Stewart's "The Daily Show" in a report, though they wouldn't let a Chinese version of him near their cameras.

Recent popular sequences have included one in which Stewart lampooned the Chinese hackers who hacked into the New York Times computer system earlier this year, wondering if that was the best they could do.

But far from squelching Stewart, CCTV even used one of his sequences on Guantanamo Bay to criticize Obama in a regular broadcast - a move widely derided by netizens.

In China, however, such criticism tends not to be welcomed by the government. Dissident artist Ai Weiwei, who regularly criticizes the government for what he sees as its flouting of the rule of law and human rights, was detained for 81 days in 2011, sparking an international outcry.

"There's nothing like political satire here," said David Moses, who studies and writes about Chinese humor.

Though the exact timing of Stewart's entrance to China is unclear, many have been watching him for four or five years, mainly through the Internet and Weibo.

"Being a journalist, you have to find out the truth," said Mao Moyu, a Shanghai journalism student who got hooked on Stewart four years ago.

"If there's ... something that hurts the public interest you have to stand out, no matter how sharp the thing is. You have to stand out and say that's not right."

Part of Stewart's popularity is that he seems cool to young people in love with all things foreign, but a thirst for satire that is not afraid to show its face contributes too, Moses said.

The closest thing that exists in China is coded references and puns that tweak official pronouncements or sound like obscenities.

"That's just shooting a finger at the government. But this is full-fledged jokes and routines about North Korea or about China and trade...It's just what they wish they could do here," Moses said.

Free translations into Chinese by Stewart's fans have boosted his popularity. In fact, one - known as Gu Da Bai Hua - now even has his own fan base.

China's thirst for foreign satire is so great that Stewart is not the only popular U.S. comic. Some Chinese say they prefer rival television satirist Stephen Colbert - although humor may not be the only issue at stake.

"I think I like Stephen Colbert's pronunciation more because it's much clearer for me," said Shanghai student Peng Cheng.

(Editing by Elaine Lies and Michael Perry)

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By Alexei Oreskovic

SAN FRANCISCO (Reuters) - Google staged four discussions expounding on the finer points of its "Glass" wearable computer during this week's developer conference. Missing from the agenda, however, was a session on etiquette when using the recording-capable gadget, which some attendees faithfully wore everywhere - including to the crowded bathrooms.

Google Glass, a cross between a mobile computer and eyeglasses that can both record video and surf the Internet, is now available to a select few but is already among the year's most buzz-worthy new gadgets. The device has geeks all aflutter but is unnerving everyone from lawmakers to casino operators worried about the potential for hitherto unimagined privacy and policy violations.

"I had a friend and we're sitting at dinner and about 30 minutes into it she said, 'You know those things freak me out,'" said Allen Firstenberg, a technology consultant at the Google developers conference. He has been wearing Glass for about a week but offered to take them off for the comfort of his dinner companion.

On another occasion, Firstenberg admitted to walking into a bathroom wearing his Glass without realizing it.

"Most of the day I totally forget it's there," he said.

Many believe wearable computers represent the next big shift in technology, just as smartphones evolved from personal computers. Apple and Samsung are said to be working on other forms of wearable technology.

The test version of Glass looks like a clear pair of eyeglasses with a hefty slab along the right side. Since it began shipping to a couple thousand carefully selected early adopters who paid about $1,500 for the device, it has inspired a bit of ridicule - from a parody on "Saturday Night Live" to a popular blog poking fun at its users.

Other industry experts take a more serious tack, pointing out the potential for misuse because Glass can record video far less conspicuously than a handheld device.

Glass also has won many fans. Google and some early users maintain that privacy fears are overblown. As with traditional video cameras, a tiny light blinks on to let people know when it is recording.

Several Glass wearers at the developers conference said they whip the device off in inappropriate situations, such as in gym locker rooms or work meetings. Michael Evans, a Web developer from Washington, D.C., attending the Google conference, said he removed his Glass when he went to the movies, even though the device would be ill-suited for recording a feature-length film.

"I just figured I don't want to be the first guy kicked out of the movies," he said.

NO GLASS ALLOWED

A stamp-sized electronic screen mounted on the left side of a pair of eyeglass frames, Glass can record video, access email, provide turn-by-turn driving directions and retrieve info from the Web by connecting wirelessly to a user's cell phone.

Google Executive Chairman Eric Schmidt dismissed concerns about the brave new world of wearable computers during a talk at Harvard University's Kennedy School of Government in April.

"Criticisms are inevitably from people who are afraid of change or who have not figured out that there will be an adaptation of society to it," he said.

Schmidt acknowledged that there are certain places where Glass will not be appropriate but that he believed new rules of social etiquette will coalesce over time. Firstenberg said it will take time for all sides to get comfortable with the new technology.

"I don't think we should go into the conversation assuming that Glass is bad," he said.

Indeed, previous technology innovations such as mobile phones and wireless headsets that initially raised concerns are now subject to tacit rules of etiquette, such as not talking loudly on the bus and turning a ringer off in a meeting.

Still, some have decided to leave nothing to chance.

Casino operator Caesar's Entertainment recently announced that Glass is not permitted while gambling or when in showrooms, though guests can wear it in other areas. In March, Seattle's Five Point Cafe made headlines for becoming the first bar to ban Glass. "Respect our customers privacy as we'd expect them to respect yours," says a statement on the caf 's website.

The California Highway Patrol says there is no law that explicitly forbids a driver from wearing Glass while driving in the state. But according to Officer Elon Steers, if a driver appears to be distracted as a result of the device, an officer can take enforcement action.

PRIVACY TRACK RECORD

Lawmakers are beginning to consider Glass.

On Thursday, eight members of the U.S. Congress sent a letter to Google Chief Executive Larry Page, asking for details about how Glass handles various privacy issues, including whether it is capable of facial recognition.

According to Google, there are no facial recognition technologies built into the device and it has no plans to do so "unless we have strong privacy protections in place."

During one of this week's conference sessions - an open discussion about Glass - members of the Glass team answered a question about privacy by noting that social implications and etiquette have been a big area of focus during the development of the product, which is still a test version.

Some of the Glass-phobia may stem from Google's own track record on privacy. In 2010, Google revealed that its fleet of Street View cars, which criss-cross the globe taking panoramic photos for the Google Maps product, also had captured personal information such as emails and web pages that were transmitted over unencrypted home wireless networks.

"The fact that it's Google offering the service, as opposed to say Brookstone, raises privacy issues," said Marc Rotenberg, the executive director of the Electronic Privacy Information Center, a non-profit privacy advocacy group, citing Google's history and its scale in Internet advertising.

Rotenberg says his main concern centers on the stream of data collected by the devices - everything from audio and video to a user's location data - going to Google's data centers.

Ryan Calo, a University of Washington law professor who specializes in privacy and technology, said Glass is not very different from other technologies available today, whether it is a smartphone or "spy" pens that secretly record audio. But Glass is on people's faces, so it feels different.

"The face is a really intimate place and to have a piece of technology on it is unsettling," Calo said. "Much as a drone is unsettling because we have some ideas of war."

For all the hand-wringing, some early adopters are sold.

Ryan Warner, who recently graduated from college and who has developed a recipe app for Glass with Evans, said he was surprised by the reaction he got when he went to a bar.

"I was like, I don't know if I should have it on or not.' I was kind of in that phase," he said, "and the bouncer was like, Oh, my god, is that Google Glass?' He was excited."

(Reporting By Alexei Oreskovic, with additional reporting by Susan Zeidler in Los Angeles and Aaron Pressman in Boston; Editing by Bill Trott)

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