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Sega Seeks to Capture Techno Toy Market for Youngsters : Technology: The video game giant's flagship product is a $160 computer designed for children as young as 3.


Sega of America Inc., the video game giant that has won the hearts and minds of many a youngster with its hip image and popular games, is expected this week to launch a line of high-tech toys for children and teen-agers.

By developing and marketing products unrelated to video games for the first time since it entered the U.S. market in 1986, Sega hopes to capture a niche largely ignored by traditional toy makers as American children's appetite for techno toys continues to amaze their often less technologically inclined parents.

Sega Chief Executive Tom Kalinske, himself a former executive at toy maker Mattel, said the company expects to generate $50 million in revenue from the new products this year.

"Our analysis of the industry is that most of the toy companies are avoiding high-tech," Kalinske said. "We don't intend to compete with Mattel or Hasbro. But we have the R&D capability, and for us, this is a logical way to go."

The flagship product, designed for children as young as 3 years old and expected to cost $160, is essentially a simplified computer, with rounded edges, a fat stylus instead of a mouse and a storybook-shaped electronic drawing pad.

When the storybook is plugged into the "Pico"--which runs on a Motorola microprocessor--the screen is activated, and children can interact with a variety of early math, reading, spelling and drawing activities. Kalinske said both Disney and Paramount plan to develop educational software for the product.

The toy resulted from research showing that while parents may want to introduce their children to computers at an early age, they are reluctant to subject such costly equipment to the sort of abuse that can come from preschoolers.

At a time when Sega has been criticized for allowing excessive violence in its video games, the new Pico may boost the company's image--while providing it with a way to hook into the growing educational software market. But analysts say the success of such a product will depend on how easy and intuitive it is.

"It could open up a whole new market for personal computers," new-media analyst Denise Caruso said. "If they can run rudimentary educational and entertainment software on that box that's kids-oriented, that could be a massive seller. But . . . you have to make it very, very basic."

Other products in the new Sega line include an electronic comic book and a "personal digital assistant for teen-agers"-- a hand-held device that serves as an electronic address book and also allows the user to beam messages via infrared transmission to friends on the other side of the room.

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