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The actual speakers in the headphones are small earbuds or similar, and that's surrounded by a large liquid crystal device the size of large headphones that goes transparent to indicate that they're not in use.
The user can set the device to lie for privacy or whatever, but in normal use people will
know whether you'll hear if they talk to you by whether you look like you're wearing large ear covers or not. They can be seen more easily and from furthur away than the small earbuds.
Activity Light Headphones
Similar idea which could be used for the same purpose [caspian, Nov 17 2006]
||LCDs can only go 50% transparent, but I guess that's okay; it
just won't look as nice as fully transparent. Though there is
that switchable meeting room privacy glass that goes white
instead of black, and I think that's nearly fully transparent
when off. Anybody know what technology that is?