published Monday, September 10th, 2012

Toys R Us gets into the tablet computer game

WAYNE, N.J. — Toys R Us said Monday that it plans to launch its own tablet computer aimed at children called Tabeo on Oct. 21, a low-priced entry into the increasingly crowded tablet business.

The news comes ahead of the holiday season, which can account for up to 40 percent of retailers' annual sales. Toys R Us has focused on exclusive toys rather than discounts as it faces tough competition from online retailers like Amazon.com and discounters like Wal-Mart Stores Inc.

The 7-inch touchscreen tablet comes with 50 preinstalled apps selected for children, including games such as Angry Birds and Fruit Ninja, and a book app called istorybooks. It will retail for $149.99, is equipped with WiFi and runs on Google Inc.'s Android 4.0 operating system.

Toys R Us sells other electronics including Apple Inc.'s iPad, but this is its first store-brand tablet. The Tabeo's main competitors include LeapFrog Enterprises' LeapPad, one of the biggest hits last holiday season, and VTech's similar InnoTab.

In the privately held retailer's most recent quarter ended July 28, its net loss widened slightly from a year ago, hurt by weakness in Europe and a decline in video game sales.

The introduction hurt shares of LeapFrog, which fell 57 cents, or 6.2 percent, to $8.58 in midday trading Monday The stock had fallen about 48 percent since the beginning of the year.

Children's tablets are increasingly popular. In addition to the LeapPad and the InnoTab, other children's tablets include the Kurio Kids Tablet from TechnoSource and the Meep Kids Tablet from Oregon Scientific, both matching the Tabeo's $149.99 price tag.

Meanwhile, the adult tablet market has been heating up. Last week, Amazon unveiled a $499 4G high definition Kindle, a $299 Wi-Fi HD model and a smaller 7-inch Kindle starting at $199. The most popular tablet remains Apple Inc.'s iPad, which starts at $399.

Needham & Co. analyst Sean McGowan said it is hard to say how a new kid-oriented tablet will fare since the market is so new, although LeapFrog's LeapPad proved popular last holiday.

"Toys R Us' Tabeo appears to offer great value, but the challenge with Tabeo will be keeping the product from occupying an awkward middle ground — not quite cool enough to get people to spend the money, but not cheap enough to be an impulse purchase," McGowan said.

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