Leapfrog eyes LeapPad app market, defend turf vs. Android
Leapfrog may just be the mini-Apple for kids ages 4 to 9.
Leapfrog's LeapPad is the tablet and content ecosystem of choice for the preschool set, but CEO John Barbour is expecting an attack from the Android army.
The children's' learning company reported better-than-expected first quarter results courtesy of its LeapPad, a durable tablet aimed at preschoolers. The company reported a first quarter net loss of $9.46 million, or 14 cents a share, on revenue of $72 million, up 81 percent from a year ago. Leapfrog also upped its outlook for the second quarter and 2012.
But the most interesting item on Leapfrog's earnings conference call was the company's grand plan to create an app market that's curated for kids, share the revenue and churn out tablets. Sound familiar? You bet. Leapfrog's master plan sounds a bit like Apple's iPad model.
Barbour said LeapPad's secret sauce is content and apps as well as a $100 kids tablet that is less seasonal than its other toys. Given LeapPad's momentum, Leapfrog has been also launching carrying cases, headphones and add-on purchases.
But Leapfrog wants to be more than a hardware company. Simply put, the company wants to develop an app ecosystem for the LeapPad. Barbour said:
At the end of 2011 we took a big step in the strategic development of our Company by opening a digital download platform to include for the first time content created by outside companies and studios. We began the transformation from a company that has developed and sells its own content into a company that curates, aggregates and distributes all that is best in children's digital educational entertainment. To date we have doubled the amount of third-party content in our app store and have signed additional deals with some exceptional children's educational content companies, including Sesame Workshop.
Barbour added that the curation part of the equation is critical for children's content. "We feel there's a big opportunity here to help parents and to create a very unique position in the marketplace through the curation of the content and really it's about us, the ability to go out there and find really good stuff," he said.
The wild card for Leapfrog, however, will revolve around an onslaught of inexpensive tablets in the market. At some point, Leapfrog's LeapPad may compete with parents' smartphones as well as their tablets.
Barbour was specifically asked by analysts about competitors this holiday season. He said that Leapfrog has "the best kids' tablet in the space" because it's durable and has the learning software. "There's no one out there that's got the depth of quality educational entertainment content that we have so if you look at then on the tablet space and you look specifically at tablets for kids age 4 through to 8 and 9, there would be a lot of people who are going after that marketplace and trying to get a share of that marketplace," he said.
The attack on the LeapPad is likely to come from Android devices. Barbour said:
There's a whole plethora of Android type tablets that are going to hit the marketplace. We've got to be prepared for it. There's nothing that we've seen here yet that has that winning combination of incredible life changing content and really well thought through hardware that's designed to teach children how to both read and write. We buy every new tablet that comes into the marketplace that we think can come into our marketplace but there's no big surprise there. There are a lot of people around the world looking at LeapPad and you can be assured we're going to get some clones out in the marketplace.