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LeapFrog Hops on a New Craze

LeapFrog (NYSE: LF  ) cashed in on the tablet craze a couple of years ago, and now it's making a splash in another hot trend. LeapFrog is unveiling LeapBand this morning, billed as the first wearable activity tracker for kids.

Kids score points through active movements and challenges that can be used to play games and enhance their virtual pets. It may not be as intricate as Fitbit, Jawbone, or Nike's (NYSE: NKE  ) reportedly doomed FuelBand, but it packs plenty into a reasonable $39.99 price.

Source: LeapFrog.

There's a built-in accelerometer, of course, to track everyday motions, including prompts from the device for kids to jump like kangaroos or wiggle like worms. There's a small high-resolution color screen right on the device to track the virtual pet and engage in games. It's water-resistant and comes with a rechargeable battery. It will be available in the U.S. and Canada starting this summer.

LeapFrog's entry into the cutthroat fitness tracker market comes just as Nike is going through layoffs at its FuelBand hardware department. The cutbacks prompted CNET to report that the FuelBand is dead. Nike refutes the claim, but pink slips speak louder than words.

LeapFrog knows what it's like to flop in a trendy category. The original LeapPad learning tablet was a hit, selling out ahead of its first holiday shopping season, with folks paying well above retail to grab one from opportunistic resellers. Things changed quickly for LeapPad this past holiday season, and now LeapFrog is sputtering.

The electronic learning toy pioneer is expected to post dreadful quarterly results next Monday afternoon. Analysts see revenue plunging 41% with a much steeper deficit than it posted a year earlier. Yes, this is a seasonally sleepy quarter to be making toys, but clearly LeapFrog needs a hit. The LeapBand could be this year's LeapPad.

Wearable computing is going to be a hot market for the next couple of years, and LeapFrog's sweet spot of introducing new tech to young children makes it a logical player here. The LeapBand is clearly not as high-tech as the wristbands that adults are wearing. There's no three-axis gyroscope, sleep tracker, or Bluetooth connectivity. However, between the low price, the virtual pet hook, and the allure of 50 free apps, it's shaping up to be a winner here. 

Kids see their parents on their iPads, heightening demand for the LeapPad in 2011. It didn't matter that it wasn't a true Web-surfing tablet experience. The form factor was hot. Now we see a similar move at a time when smartwatches and fitness trackers are making functional bracelets a hot item. 

LeapFrog is on to something here. Given the brutal report it will be serving up early next week, the LeapBand couldn't be coming at a better time.

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Rick Munarriz

Rick has been writing for Motley Fool since 1995 where he's a Consumer and Tech Stocks Specialist. Yes, that's a long time. He's been an analyst for Motley Fool Rule Breakers and a portfolio lead analyst for Motley Fool Supernova since each newsletter service's inception. He earned his BBA and MBA from the University of Miami, and he now lives a block from his alma mater.

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