Toys "R" Us Enters Tablet Market

In a move that highlights the continuing struggle between big-box retailers and encroaching technology, Toys “R” Us announced today that it is releasing Tabeo, its first ever children’s tablet. The toy giant’s new seven-inch tablet will come complete with Wi-Fi and 50 preinstalled apps and games, and will run on Google’s Android system, the company said in a press release. The tablet can connect to the Internet, but has several parental control options that nervous parents can use to restrict Internet access with. The tablet is available to preorder on toysrus.com for $149.99 and won’t hit stores until Oct. 21.

The new tablet is clearly a ploy by Toys “R” Us to resist turning into an expensive product showroom, much like Best Buy has become. Both companies were once big-box titans, but in the age of Amazon (Nasdaq: AMZN  ) , customers are all too happy to walk into a store and price compare, then simply order the cheapest option online. That’s one of the reasons why Best Buy is completely overhauling its business strategy in the hopes of returning to its glory days.

Meanwhile, companies like Amazon have proven that the pivot into the tablet market is a profitable one to make. Its old Kindle tablet sold out last week in anticipation of the company’s newest tablets, announced last Thursday. The new and improved Kindle and Kindle Fire may be forces to be reckoned with, but Toys “R” Us’ new tablet will be competing in an entirely different arena.

Right now the children’s tablet market is still pretty sparse, with only a few companies targeting the niche. One of the best in the business is LeapFrog (NYSE: LF  ) , which had great success with its LeapPad. The five-inch tablet comes complete with stylus, camera, and several interactive educational games and apps, but does not connect to the Internet. This may be the best selling point the Toys “R” Us Tabeo has, and it could be the difference between the retailer’s downfall and its survival.

Will the new Tabeo bring about the apocalypse for iPads or Kindle Fires? Probably not, but anyone with a kid will almost certainly see the new Tabeo on a wish list at some point this holiday season. That’s reason enough to keep an eye on the new tablet and see how much market share Toys “R” Us can steal from its digital competitors.

Motley Fool contributor Mark Reeth owns none of the stocks mentioned above, but he would love a Tabeo for Christmas. Follow him @ChristmasReeth. The Motley Fool owns shares of Best Buy and Amazon.com. Motley Fool newsletter services have recommended buying shares of Amazon.com and LeapFrog Enterprises. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


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