What's Making Toyland Buzz

Cheap chips are yielding junior versions of high-tech gizmos, as companies struggle to stay abreast of increasingly tech-savvy kids

Just two years ago, New York's annual Toy Fair was hit with an invasion of robots. Thanks to electronic components that had plunged both in size and price, every toymaker worth its action figure trotted out toys chock-full of electronic gizmos. Problem was, most of them didn't seem like much fun. Remember Meow-Chi and Tri-Rap-a-Ceratops? Well, not many kids do, either. Most fizzled, consigned to Toyland graveyards.

This time around, toymakers insist they're getting the hang of this technology thing. From talking dollhouses to plush toys that sing and dance, more than two-thirds of the roughly 5,000 new products being introduced at this year's annual toyfest incorporate a sensor or electronic chip, figures Frank Catalano, a Seattle-based toy consultant.

So why has the $20.3 billion toy industry gone so gung ho for gadgets? Toy executives view gee-whiz electronics as the front line in their war against "age compression." That's industry-speak for the fact that today's kids outgrow toys at an ever-younger age. So for kids who watch their teen siblings yak on real cell phones, Hasbro's Tiger Electronics unit (HAS ) offers Thin-Tronix, a hot pink speakerphone that hangs from a wall.


  Cheap technology has resulted in a slew of toys that allow kids to emulate teen pastimes like boom-box toting or music swapping. Printing the electronics right on the plastic surface allows Toys 'R' Us (TOY ) to offer a 13-inch inflatable FM radio called Airwavez. And Mattel (MAT ) has created a music mixer, shaped like a cell phone, to go with its popular tween-oriented My Scene fashion dolls. Girls can use the mixer to record their favorite tunes, then swap them with their friends' mixers.

Remote control is everywhere -- making that radio-controlled truck of yesteryear look like a clunker. Mattel's Tyco R/C unit is pushing Power Changers, 4-inch-long remote-controlled cars and boats with swappable engines. And as for those old spinning tops? Hasbro's Beyblades battling tops can now be launched by remote control.

The hottest toy battle will likely pit Mattel's Fisher-Price unit against Leap-Frog Enterprises, maker of the sizzling-hot LeapPad, a learning aid that emits sounds and music when kids touch a stylus to a picture or letter. Borrowing technology from notebook computers' touchpads, Fisher-Price's new PowerTouch Learning System does away with the stylus.

Fisher-Price hopes to snare three-year-olds before they pick up the LeapPad habit. It had better. The way kids are going today, five-year-olds may soon be downloading SpongeBob SquarePants movies to their lunchboxes. Sound far-fetched? Somewhere in Toyland, it's probably on a drawing board.

By Gerry Khermouch in New York