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SOUTHLAND BUSINESS

Rabbit Hopes Multiplying System for VCRs Will Add Up to Profits

June 22, 1986|DONNA K. H. WALTERS

For a small Santa Monica firm, business is a simple mathematical principle: Multiplication.

Rabbit Systems, which makes what it calls a VCR multiplying system, took a look at the numbers on VCR ownership and designed a product to fit.

Each month this year, about 750,000 more people will buy videocassette recorders, adding another 5.25 million VCRs by year-end to the estimated 25 million to 30 million already in use.

And, Rabbit Systems officials believe, there are probably at least two TVs for each VCR in an American home.

The company's product, VCR-Rabbit, adds two more boxes to the electronic collection. Each is small though, about 7 inches by 4 inches and less than 2 inches tall.

One (the transmitter) is attached to the VCR and its TV; the other box (the receiver) can be put on another TV in another room.

For about $90, these two boxes turn the second TV into an additional viewing screen for the VCR.

The Rabbit also gives the second TV access to any pay-TV cable service the first set has. If the VCR itself is operated by wireless remote, the Rabbit enables the VCR's remote control wand to work on even a non-remote TV.

Additional receivers can connect up to five TVs to one VCR.

Rabbit Systems, a 2-year-old company founded by electronics entrepreneur Edward Krakauer, is backed by two partners, including the Hong Kong company that manufactures the boxes.

The other partner helped develop the slick marketing campaign for the Rabbit. The ads and packaging feature an adorable, fuzzy white rabbit--er, make that several adorable, fuzzy white rabbits.

Krakauer, who conceptualized the product and named it, earlier developed hand-held electronic games for Mattel.

In 1980, he founded General Consumer Electronics, which made game wristwatches and calculators and was sold to Milton Bradley in 1982.

The VCR-Rabbit has been available since March--after a spate of delays. The company spent nine months and $1.5 million in a fruitless effort to win Federal Communications Commission approval of wireless versions of the Rabbit system--one of which would have broadcast signals from one box to another.

The Rabbit's two-year development time was "disappointingly long," said Krakauer. But he said the company is working on a number of new products, "and we'll make sure they don't have government agency" problems.

Having wires running from one Rabbit-equipped TV set to another in a different room could be a consumer stumbling block, Krakauer admitted. But the company has tried to make it as small an impediment as possible, and uses a "mini-thin" wire--about the thickness of a rubber band--to connect the two.

Krakauer said company research shows that despite the wire, there will be strong demand for the Rabbit--enough, he reckons, to sell a Rabbit this year to about 2% of VCR owners. From then on, Krakauer believes, its a matter of watching the profits multiply.

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