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LeapFrog offers toddler-safe texts

Seeks to extend edge in booming tablet market

– Toddler-safe texting has arrived.

Spurred by burgeoning demand for child-styled tablets, LeapFrog Enterprises and VTech Holdings revamped their tyke-targeted devices to add features that let 3-year-olds send short messages to grandma and even watch online videos without stumbling across websites kids shouldn’t see.

“Exposing our children to the Internet at an early age is incredibly valuable, but how do you do it safely?” John Barbour, chief executive officer of Emeryville, Calif.-based LeapFrog, said in an interview.

By tackling parents’ fears about their kids going online, these toymakers are seeking to extend their dominance in a niche category of the booming tablet market that they created two years ago after releasing the first versions of LeapFrog’s LeapPad and VTech’s InnoTab.

With the added Web features in the recently released $150 LeapPad Ultra and $100 InnoTab 3s, they are also presenting more of an alternative to devices from Amazon.com, Samsung Electronics and Apple in the larger market for tablets that is projected by researcher IDC to increase 34 percent to 67 million units shipped this year.

LeapFrog and VTech faced little competition early on for tablets made specifically for children – as opposed to parents handing over an iPad to their kids.

The LeapPad became a runaway hit, and its success helped turn around the company’s fortunes.

The shares have more than doubled since the first version went on sale in July 2011, compared with a 9 percent gain for the Standard & Poor’s 500 Index.

That easy ride has ended and it’s not because Mattel and Hasbro, the world’s largest toymakers, have entered the market.

Despite these devices being one of the few bright spots in the sluggish U.S. toy industry, they’ve stayed out, saying making tablets is too expensive and risky and will instead focus on creating branded content for mobile devices.

Meanwhile, Samsung announced a kid tablet last week that will be released this fall, and Amazon’s recent television advertising features a parade of children.

It’s offering a monthly subscription service with unlimited kid content, more parental controls and marketing the 7-inch Kindle Fire at $174 as “the perfect family tablet.”

While sales of children’s tablets account for a small part of the total tablet market, which includes Apple’s top-selling iPad, there may be plenty of room to keep carving out this niche with more families now buying more than one tablet, IDC said.

Given that LeapFrog has established itself as a leader in kid tablets and has increasing support from retailers such as Wal-Mart Stores, the Ultra is projected to be one of the top-selling toys this holiday-shopping season, said Michael Swartz, an analyst with SunTrust Banks Inc. in Atlanta who recommends buying the shares.

LeapFrog executives thought long and hard about adding adult features to the LeapPad because while kids are begging to get online, parents feel the need to hover over them, said Jill Waller, vice president of multimedia learning.

VTech also spent months designing a tablet kids could use on their own.

Both companies curated the online experience, limiting access to such sites as PBS.org.

LeapFrog makes all these decisions through its LeapSearch browser, while VTech uses filters and also lets parents add or block content.

Another LeapFrog innovation is its texting app, Pet Chat. Users are restricted to sending messages to each other from a pre-determined list of phrases such as “I’m being silly.”

VTech, of Hong Kong, has Kid Connect, which allows tykes to text another InnoTab or parent-approved smartphone.

“A preschooler will have the same ability as everyone else in terms of staying connected to Mom and their friends,” said William To, VTech’s North America chief.

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