(CBS) Back in the 1990s, a researcher at one of Hewlett Packard's labs in the United Kingdom got the idea of producing a talking photograph. Why not embed a chip onto a picture that would enable the person viewing the photo to listen to a message or sound at the same time?

The first prototypes were a bit crude, but the idea ultimately led to a prototype of what could be a revolutionary new line of products for the Palo Alto-based technology giant.

Monday, the company showed off some of its new Memory Spot chips. They're smaller than a grain of rice and have a built-in antenna and transmitter to transfer to wireless readers and writers.

So far, there are two versions in the labs. One stores 256 kilobits and a slightly larger though still extremely small version stores 4 megabits which is about a half a megabyte of data. That's not enough for a full-length movie, but it is enough storage for a very short video clip, a couple of 4 by 6 photos or up to an hour of sound.

The chips, according to HP Labs Associate Director Howard Taub, could be used for a wide variety of applications ranging from putting music samples on the outside of a CD case to storing a patient's entire medical record on a dot-sized section of a wrist band.

The chips are rewritable so a physician, for example, could use a PDA to update a patient's medical record right on that wrist band.

Taub envisions chip reading and chip writing devices built into future generations of cell phones, allowing people to use, create and update data on the fly.

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Click here to check out Larry Magid's podcast interview of Howard Taub of HP Labs, talking about the many uses of the company's tiny new chip.

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One example is a movie poster that contains a short trailer of the film. Someone could walk up to the poster, touch it with their cell phone and watch and listen to the trailer right there.

A would-be executive could record his or her entire resume on a business card, an aspiring model could include a portfolio of photos and a musician could have a sample set of tunes on a card or embedded into a paper resume.

The chips have an integrated antenna and a transmitter that's capable of transferring data in or out at 10 megabits per second -- about the same speed as a WiFi wireless network.

I had a chance to play with a prototype Monday at HP's headquarters in Palo Alto and watch as a staff person took a digital picture of a colleague and transferred that picture to a chip embedded into a laminated card.

He then handed the card to me and I walked over to another PC which had a reader that was able to read and transfer the data. The process on both ends was almost instantaneous.

At the moment, there are only a few prototype readers at HP labs but the company envisions an "eco system" which would involve readers built into a number of devices including PDAs, cell phones and laptop PCs.

By Larry Magid ©MMVI CBS Broadcasting Inc. All Rights Reserved.

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