How artificial intelligence is moving from the lab to your kid's playroom

The one toy that everyone has been talking about is Mattel's Hello Barbie, which is powered by a proprietary platform that was developed by ToyTalk, a San Francisco-based AI company founded by two former Pixar employees. The doll, slated to hit shelves in November, will retail for $74.99.

As the newest iteration of the iconic Barbie doll that has been around since 1959, Hello Barbie uses a combination of a microphone to record conversations, WiFi to transfer those conversations to a computer server, voice-recognition software to figure out what the child just said and an algorithm to determine what to say next to the child, who might range in age from 3 to 9. In some cases, the conversations with Hello Barbie can go as deep as 200 exchanges between child and doll.

A child might ask, "Want to play a game?" Hello Barbie then immediately accesses one of 8,000 possible responses to simulate the back-and-forth of a typical child's conversation. If the question can't be answered, there is a fallback response that is perfect for just about any situation - "Really? No way!"

Hello Barbie will even remember conversational points from the past. It will recall whether a child has brothers or sisters, for example, or when they last played together.

Taking a similar tack, Elemental Path, maker of the CogniToys line, is planning to roll out in December a $119.99 talking dinosaur for children as young as 5 that is powered by the cognitive computing capabilities of the IBM Watson system. The first set of questions and answers for the CogniToys Green Dino were generated by convening parent focus groups in Brooklyn. However, since the dinosaur is connected via wireless Internet, it can learn in real time and get answers to questions that might not have been programmed into it from the outset.

In the toy's Kickstarter video, which raised $275,000 from more than 2,000 backers, you can see the power of partnering with IBM Watson. A child might ask, "How far is it to the moon?" or "What is the speed of light?" The Watson-powered AI engine processes the question - and here's the AI parlor trick - adapts the response to the age and development level of the child. Think of the dinosaur as a talking companion for your child - a companion who also happens to have the cognitive ability of a prize-winning "Jeopardy!" contestant.

While you can split hairs about whether a real-time response from a plastic toy constitutes intelligence, and there have been other smart toys before, something is fundamentally different about the CogniToys Green Dino or the Hello Barbie. They are able to understand conversations, give intelligent responses and learn on the fly. They can more than just answer a series of simple questions with one-off replies, the way one might expect from Siri.

According to MIT's Sherry Turkle, author of the new book "Reclaiming Conversation: The Power of Talk in a Digital Age," we as a society are experiencing a "robotic moment." We no longer expect artificially intelligent machines to be fully human - as long as they can compensate in other ways. "It's not that we have really invented machines that love us or care about us in any way, shape or form," she says, "but that we are ready to believe that they do."

Future AI toys promise to be even more realistic as they go beyond just speech recognition to involve sophisticated sensors capable of understanding specific gestures. In May, for example, Google published a patent for an Internet-connected teddy bear hooked up with sensors, cameras, microphones and a wireless Internet connection. In the patent, Google suggests that the robotic teddy bear might be able to control a home environment.

To see how gesture-sensing technology might be combined with AI to simulate real-world behaviors, check out theMiPosaur, unveiled by WowWee toys at the beginning of the year. A YouTube video produced for Toy Fair New York in February shows how these robotic dinosaurs can go into "gesture mode," "leash mode" or "food mode" and respond to the gestures of a human hand or an interactive tracking ball, simulating the types of behaviors that you might expect from a well-trained pet.

Of course, just because these are toys doesn't mean that there aren't some serious issues to consider. The Hello Barbie toy, for example, has already attracted the negative attention of privacy advocates, who claim that the toy violates the right to privacy for children under the age of 13 (something that ToyTalk and Mattel clearly disagree with). And the Google teddy bear immediately attracted attention from the British Broadcasting Corporation as a "creepy Internet toy" and comparisons to the "super" teddy bear in "A.I.," the Steven Spielberg film from 2001.

Another concern, as with any object hooked up to the Internet, is that there is always the chance of getting hacked. Play experts, too, have weighed in, claiming that these "smart toys" might actually be bad for children. They claim that the playthings could reduce imaginative play and even inspire a number of negative behavioral patterns in children.

If AI toys are ever going to catch on, toy companies clearly must overcome the "creepiness" factor. They also must address the potential for their products to fundamentally change the nature of how we interact with people and objects around us.