A year ago, El Segundo’s Fuhu Inc. introduced a kid-friendly tablet computer, one protected by a brightly colored rubber case and a suite of parental controls.
Called the Nabi and priced at $199, it was aimed at parents who want to offer their kids online play time but don’t want to risk junior dropping a $500 iPad, surfing the web unsupervised or playing Angry Birds at all hours.
Fuhu released the Nabi just before the holidays and signed an exclusive distribution deal with toy retailing giant Toys R Us Inc. But sales fell short of Fuhu’s expectations, with Toys R Us only ordering about 20,000 tablets.
Then, last month, the Wayne, N.J., retailer released its own tablet, the Tabeo, which, like the Nabi, comes with a brightly colored rubbery case and a 7-inch touch screen.
“It’s not even as if they have their own spin on it. It’s just a copy,” complained Fuhu Chief Executive Jim Mitchell.
The Tabeo, backed by the Toys R Us name, could take a big chunk of the kid-tablet market away from Fuhu and the handful of other companies that make such devices for kids, including better-known toy and electronics companies.
That’s a threat that has prompted Fuhu to sue Toys R Us, with claims the retailer not only torpedoed Nabi sales last year but copied the tablet for its Tabeo. But even if Fuhu wins in court, it might be a temporary victory.
With tablet computers becoming more common and cheaper, analysts say there are fewer reasons to buy a child-specific tablet today than just a year ago – and that products like the Nabi might not be around for long.
Indeed, there are thousands of protective accessories available for tablets, and tablet makers and software companies are starting to roll out the same kind of web-safety and parental-control features that are a hallmark of kids’ tablets. Just last month, Amazon.com released Free Time, a parental control system for its Kindle Fire tablets.
“It’s going to be difficult for the kid tablets in the next couple years,” said Andrew Krabeepetcharat, a technology industry analyst for market research firm IBISWorld in Santa Monica. “The market for kid-friendly tablets is getting a lot of competition from bigger players. They’re offering really similar features to those that attracted consumers to these kid versions in the first place.”
Toys R Us executives and its attorney declined to comment for this story.
Other kid tablets already on the market include the Innotab from Hong Kong toy and technology company VTech; the Meep! from Oregon Scientific Inc. of Tualatin, Ore.; and the new LeapPad from LeapFrog Enterprises of Emeryville, a company that has made tabletlike educational toys for more than a decade.
Those companies all come from the toy and hardware side, whereas Fuhu got its start six years ago as a software company. Its most popular product, FoozKids, is a software program that lets kids surf the web and use e-mail in a safer, parent-controlled environment. After the iPad was released in 2010, the company started work on a tablet computer for kids.
“We started seeing kids wanting to play with our iPads,” Mitchell said. “But we didn’t want to give them such an expensive device, and it didn’t provide the same environment we had with FoozKids.”
Most child tablets on the market are protected by rubberized corners or cases; can access only parent-approved content; and are relatively cheap, selling for between $100 and $200. Some, including the Nabi, have apps that help develop math skills or keep track of household chores.
But while those features set child tablets apart from standard tablets a year or two ago, that’s less the case today. Most tablets can be outfitted with protective and even kid-themed cases and accessories, and they are getting cheaper: Amazon’s first-generation Kindle Fire tablet is selling for $159, and Google Inc.’s Nexus for $199. Tablet makers and software developers also are releasing programs that can turn a standard tablet into something similar to a Nabi.
“A lot of child-friendly tablets come preloaded with apps like chore lists, but all these same apps are available on the Amazon app store. And all the major tablet manufacturers are incorporating child controls and safety locks,” said IBISWorld’s Krabeepetcharat.
Consider Funamo Inc., a Cupertino company that this year released a suite of parental controls available for Android phones and tablets, including the Kindle Fire. It plans to have its software available for Apple Inc. products later this year.
Funamo software gives parents many of the same controls found on Fuhu’s Nabi tablet, including the ability to block or allow specific websites and applications, monitor what applications kids are using and even set times during which certain apps can’t be used.
For Chief Executive Howard Li, developing software instead of hardware was a no-brainer.
“For any company that tries to win the market with a device, it’s going to be tough,” Li said. “You’re competing with all the makers of tablets. For us, all the tablet manufacturers are our partners. For (Fuhu), they’re competitors.”
That competition among tablet makers is likely why some toy companies that might otherwise try to develop their own tablets have instead focused on accessories and apps.
For instance, Fisher Price, part of El Segundo’s Mattel Inc., makes pink and blue rubberized cases for iPhones and the Kindle Fire, and has educational apps available through Apple.
And Malibu toy designer Jakks Pacific Inc. recently announced a joint venture with billionaire Patrick Soon-Shiong’s Nantworks LLC under which the companies will develop interactive apps for Android and Apple devices.
“There are too many people in the tablet world,” said Jakks Chief Executive Stephen Berman. “Instead of Jakks going down the path of doing a tablet, we’re bringing technology to those tablets.”
But Mitchell maintains the Nabi is more advanced than other kid tablets with sophisticated parental control systems and a processor faster than that of the Kindle Fire. And even as he acknowledges the competition from the broader tablet market, the company is doubling down on the device.
While the company still supports its FoozKids software, most of its 120 employees are now focused on the Nabi. Fuhu hopes to make money on the tablet, as well as on accessories and applications sold through its own app store.
“We have really transitioned our company,” Mitchell said. “We spent years developing this.”
That’s a key reason Fuhu filed its federal lawsuit in San Diego last month. The company alleges Toys R Us stole the Nabi’s shape – a rectangle with round, flared corners meant to look like a butterfly – and trade secrets that Fuhu disclosed to Toys R Us when the two companies were working together last year. Fuhu has asked the judge to stop Toys R Us from selling its Tabeo tablet, scheduled to hit the market this month.
For now, though, sales of Fuhu’s updated Nabi 2, released this summer, have been brisk. Fuhu ended its exclusive distribution deal with Toys R Us in January, and now sells its tablets at Wal-Mart, Best Buy, Gamestop and Amazon.com. Mitchell said Fuhu has sold already about eight times as many Nabi 2 tablets as original Nabis – that’s about 160,000 Nabi 2s.
Those sales could continue, at least for a while, as parental controls for phones and tablets are still in their early stages and some parents are likely to continue to want kid-specific tablets.
James Floyd Kelly, a tech writer who contributes to Wired magazine’s GeekDad blog and has tested the Nabi and other tablets, said he doesn’t yet feel comfortable with the parental controls available for most tablets. For instance, he said there’s no way to restrict specific apps on his iPad.
“I would prefer a more granular level of control,” he said. “As long as they’re not doing that, there’s going to be a group of parents who want the Nabi or something like it.”
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