Tuesday, June 26, 2012

Are Traditional Toys On Their Way Out and Educational Electronics In?

Okay so, I was a child of the 60s and 70s and back then we had tinker toys, Legos, erector sets, and Lincoln logs. These were great toys, but they were also educational tools in many regards. If you could conceive it, you could create it. This helps harness the creativity, imagination, and the thinking of the child, in hindsight it worked well. I doubt if any parents watching their kids play with Legos would disagree. Obviously that company has withstood the test of time, and emerged even stronger in the modern age. Okay so let's talk.

I have a question for you; are electronic toys taking over the market now?

An interesting article appeared in the Wall Street Journal on September 1, 2012 titled; "Lego Chief Sees Weak US Demand for Toys," by Jens Hansegard. The CEO in an investor conference call noted that consumers were tapped out on credit (credit cards) and probably wouldn't be spending big this Christmas season. Is he right? After all, the last 6-months have been good for the Lego Corporation.

Could it be that much of Lego's success recently has to do with its ability to take Legos in the real world and merge them with gaming in the virtual world? This would intrigue parents because it allows their children to understand the concept of CADCAM design, engineering, and taking all of this to the next step. Many toys go through periods of fads; with incredible growth spurts, and then incredible crashes. What was popular as a toy three years ago won't even be on the shelves of the discount merchandisers today; do you see my point?

When the CEO of Lego warns of future earnings in some regards he may be telling Wall Street analysts; "do not overdo it with your earnings and profit expectations," therefore, the company can actually meet them. This is a new strategy which is becoming more prevalent in the era of "forward-looking statement" lawsuits and regulations. Still, he may also have a point even though the company did good in the previous six months, the Lego Corporation has to be very careful not to become a fad of the past. They've made it this far, and they hope to keep going.

Nevertheless, more and more kids are intrigued with their personal tech toys and small electronic devices, and Legos must continue to make that transition, if not, the CEO is absolutely correct, and even with their theme Park, awesome branding, and great products they could very well hit the skids. Indeed I hope you will please consider all this and think on it.

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