The Life Electric

Everyone wants an iPod. Or maybe a Treo. At minimum, the smallest, lightest, Internet-enabled cell phone available, with built-in camera, customizable ring tones and BlueTooth technology. Plus a maximum mega-pixel digital camera, beefed up with the longest amount of digital video filming time possible. And don't forget the portable DVD players—one for the plane and a set for the cars—the WiFi-enabled laptop and a few plasma screen high-definition TVs.

These days, life looks more and more like the science fiction writers predicted it would. The cars may not fly yet and the Star Trek teleporters are still a few years away, but everything else is synched up—fingers crossed, correctly—for maximum accessibility and non-stop entertainment. Isaac Asimov would have been proud. Even prouder, no doubt, are the world's consumer electronic companies. Theirs is a world that keeps growing. Sales at the top 100 consumer electronics retailers in the U.S. rose nearly 11 percent in 2005 to $108 billion, the latest in a string of successful years for the top CE merchants, according to a recent study of the industry by the trade magazine TWICE: This Week In Consumer Electronics.

Among those watching the digitalization of the modern world are not just manufacturers and retailers, analysts and reporters—it's also their kids. And they want in on the action.

Electronics for kids are certainly nothing new. Toys have had batteries surreptitiously hidden within them for decades. But in the last few years, child-centric electronic lifestyle products have increasingly come into their own, mimicking the products adults have come to rely on in their everyday lives. Several toymakers have jumped in to satisfy children's interest in staying connected both literally (through voice and email) and culturally (through music, movies and television). At the same time, the consumer electronics market has looked to do the same.

It's a development, says Ernie Speranza, chief marketing officer at KB Toys, Denver, Colo., where “you've got the toy manufacturers looking at electronics from a toy perspective and the electronics industry looking for products that cross over to kids. You begin to wonder where the toy store ends and the electronics store begins.”

The market segment most receptive to youth electronics, those in the industry say, is tweens—those elementary school-age kids too young for “real” consumer electronics, according to their parents, but old enough to know what they want when they see it.

“Whenever there's a 'downsized' version of a popular [electronic] product for adults, there's an instant market for it from tweens,” says Julia Fitzgerald, vice president of marketing at VTech, Arlington Heights, Va. There's a “tremendous” trickle-down of trends in the adult market to kids, she says, “especially when talking about tweens versus younger kids.”

Fitzgerald adds, “One of the things that helps define tweens is their wanting to be older—they can't wait to be older—and part of the outwardly way they show everyone that they can keep up with their older brothers and sisters is by their outward trappings. These kinds of products help them do that.”

Kids are looking for “that aspirational experience,” agrees Jeff Jackson, vice president of marketing for Hasbro's Pawtucket, R.I.-based Tiger Electronics brand. “They see all of the things that adults have, from cell phones to iPods, and want a piece of that lifestyle. And they want [kids lifestyle electronics] done in a way that's made uniquely for them.”

Effectively marketing lifestyle electronics products to kids is a challenge, manufacturers say, that demands a seamless blend of features (adult-styled ones as well as those that appeal specifically to kids), age-appropriate kids' content and (in a nod to purse-string holding parents) competitive prices.

“Kids themselves are adopting new technologies and behaviors on a daily basis—and, let's face it, they use that technology in a different way than adults do because they're growing up with it and don't know anything different,” Jackson says. “An adult using a computer would use it to write spreadsheets, but kids use a computer primarily to be entertained. [Children's] expectations and their comfort level [with technology] are completely different than adults. I really believe that the success [that Tiger has] had is because we're spending the time with kids to understand what they want. They will tell you they want MP3 players and cell phones and high-definition televisions in their bedrooms and all that—because that's what they're exposed to—but at the same time they're savvy and practical. They know they're probably not getting a cell phone or a high-definition television, but they want something like it done in a way that is made specifically for them.”

For Tiger, that “specifically for them” element takes the form of exclusive content for its VideoNow portable video player for kids. Since 2003, the proprietary format player has offered content that only plays on the VideoNow unit, featuring celebrities popular with tweens like Hillary Duff and Raven Simone. The unit met the demand of both parties in the buying decision: kids and their parents, says Jackson.

“When we launched VideoNow, kids were telling us they wanted a portable video player. At that time portable DVD players were $150 or $200. Parents were saying, 'I'm not going to let Johnny throw a $150 item in his backpack!'” So Tiger made a more affordable product, and—to increase its appeal to tweens—offered them content no one else had, plus worked to make it look cool enough that kids “wanted to be seen with [their VideoNow player],” Jackson says.

“That type of insight into kids, execution and delivery of entertainment is what sets [Tiger] apart from a consumer electronics company that can (because the cost of technology gets cheaper) make a more affordable DVD player or MP3 player than we can.”

At VTech, content is also what separates its products from competition from consumer electronics manufacturers, says Julie Fitzgerald. As costs of technology go down, parents will always find that buying a “real” laptop for their kids is an alluring proposition, she says, “but with something like a laptop, there's no content with it. What's really valuable with a company like VTech is that we've been making educational products for 30 years so we're a trusted source. We're never going to deliver the most cost-effective MP3 player or laptop—there's always someone out there who can do a cheaper, down-and-dirty version of the raw technology, but that's where the challenge is: What makes this more valuable to a mom? What makes this more valuable to a child? And that's really where we turn to our content, to show how we add value.”

So at VTech, they've made seemingly small adjustments to already successful products in order to keep up with technological changes in the market. The company's new Nitro Vision system, for example, removes the one most noticeable limiting factor of its many learning laptops: their obsolete-looking black-and-white screens. The Nitro Vision reconfigures VTech's laptop-style electronic learning aids into a desktop computer format that, crucially, plugs into a television. “Voila,” says Fitzgerald, “All of the learning activities from the laptops are still there, but now in full-color and on a much bigger screen.” That has also opened up the ability to produce more visually appealing content for an older user—kids ages 6 and up, adds Fitzgerald. Similarly, VTech's V.Smile Pocket hand-held video game player succeeds, Fitzgerald says, because the resolution of its screen is twice to three times that of competing systems.

“That's just the way it is,” says KB Toys' Ernie Speranza. “[Electronic] products need to be rejuvenated. They need to do more, be bigger, better, faster and more colorful. But it's where the toy industry is going—so much of the business is now electronics-driven, whether it's your basic doll or a V.Smile. Last year, electronics went into a number of different areas, like communication, and there's usually a lot of learning in them, which is what mom wants. I think the toy industry is now giving it to her.”

“The real challenge for marketers,” adds VTech's Fitzgerald, “is to take this raw technology and do something with it that's interesting. You look at MP3 players right now and all people are doing is putting different licenses on them. There's a certain level of saturation and then you're all fighting against the iPod, which is the brand that the kids all really want. The challenge for manufacturers is to take these technologies that had been originally for teenagers or adults and figure out how to employ them in a way that makes a product more interesting to a child.”