LeapFrog: When Pens FLY

If you associate LeapFrog Enterprises (NYSE: LF  ) with electronic learning toys for sponge-like toddlers, the toymaker has a pentop computer that it hopes will change your mind.

Pentop computer? Yes, LeapFrog's new FLY claims to be the world's first pentop computer. The $99 gizmo hit retailers earlier this week. It looks like a chunky pen, only it's also packing an optical scanner and a computer chip. Draw a calculator, and you can physically work out a mathematical calculation. Draw a musical instrument, and the pen's speaker allows you to play it. The catch is that you must do this on special dot matrix paper, but if the ability to manipulate and duplicate what you draw appeals to the masses, LeapFrog will have another hit on its hands with FLY.

Sure, the company has a new advanced model in its popular Leapster series that is bound to be a holiday hit. Even though LeapFrog has stumbled over the past two years, there is still a healthy consumer appetite for its educational playthings and the many add-on peripherals that made LeapFrog so attractive in its prime.

FLY also tries to emulate the LeapFrog model with expansion packs and add-on game cartridges. Play baseball by scanning baseball cards? Yes, FLYware makes it possible.

The company will have an uphill battle in marketing a pricey product for pre-teens. It has had no problem in the past battling it out against the likes of Motley Fool Inside Value recommendation Mattel (NYSE: MAT  ) and Stock Advisor pick Hasbro (NYSE: HAS  ) for the toddler market. Now it's dangling portable fruit for young'ns who are toting around Nintendo (Nasdaq: NTDOY  ) GameBoys, Sony (NYSE: SNE  ) PSPs, and digital music players like Apple Computer's (Nasdaq: AAPL  ) iPod nano. Their benchmarks and expectations are bound to be greater.

The company did test FLY with older children before the pentop's official launch, so one would think that LeapFrog knows what to expect. Its namesake site markets its flagship learning gadgetry to parents, but LeapFrog's dedicated FLY site is clearly geared to appeal to its young, prospective users. Just about the only thing missing was hooking up with rocking popsmiths Sugar Ray to sing "I just wanna FLY" or R. Kelly to belt out "I believe I can FLY" to really win over the audience.

In this week's new issue of the Motley Fool Rule Breakers growth stock newsletter service, my early adopter column reviews the potential hot toys for the holiday shopping season, and FLY is definitely a dark horse worth watching. There is a lot at stake with serious money to be made by the purveyors behind the seasonal favorites.

Horses? Frogs? Flies? The animals are certainly starting to gather around to see if LeapFrog can really FLY this time.

Hop on our free trial offers today and you can sample current and past hit picks from Rule Breakers and its fellow Fool newsletters.

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Longtime Fool contributor Rick Munarriz is a kid at heart and he does own shares in LeapFrog. TheFool has a disclosure policy. He is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.

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