The South Korean electronics manufacturer LG has introduced a USB flash drive that will telephone you if it has been lost or stolen. It also features built-in encryption to protect your information.

http://www.inspice.com/aprod-code/doc/it-ufd.htm

But how does it know?... I mean, how does a USB drive know when it has been stolen?

Apparently, the system is kind of flawed. When the flash drive is plugged into an unauthorized computer, it will automatically email the new computer's IP address to the owner's email address. So apparently, you will have to authorize all the computers that you will use the drive in.

I wonder if that could be hacked to make a USB drive virus...

Then that's pointless if you can't plug it in at an internet cafe, at school, etc...

how do you "authorize it", by typing in a password? Stupid.

Also, what if it's not connected to the internet?

If you're going to say that, you might as well say that Nintendo is stupid too. Cuz first of all, Nintendo has done similar stuff. In both instances, a good idea is ruined due to poor execution. Nintendo did the same thing with the Revolution. They wanted to tap into the world of virtual-reality. That's a good idea, but the way it was done was terrible. LG hasn't done a horrible job, but it is evident from this discussion that the product is still flawed. But also note that the drive hasn't been released yet.

Come on, that is such a tangent that I don't know what.

It may be a bit of a tangent, but it is a good analogy.