First Amazon and now Toys R Us. Retailers are increasingly eyeing the growth of the mobile market and seeing an opportunity to come out with their own hardware design, but the strategy may present more challenges than opportunities for some.

Toys R Us’ new tablet is called tabeo and comes with integrated controls designed to make it easy for parents to customize the level of Internet access for each member of the family. The device, which is built on Android 4.0 or Ice Cream Sandwich, will be available exclusively at Toys R Us stores starting Oct. 21 for $149.99.

“I like the fact that it takes into account children with the form factor and a bumper but, from what I’ve seen so far, the kid considerations stop at the screen,” said Dan Shust, vice president of emerging media at Resource, Columbus, OH.

“I wish it had a more fanciful interface,” he said. “That said, it has a great price point and they may sell a bunch initially.

“Without stronger kid-friendly features, it is going to have a hard time competing with the new Kindle Fire and a smaller iPad, if there is one.”

Retailers and mobile hardware
With Amazon and Toys R Us both moving into the mobile hardware space – and Amazon quite successfully at that – the question is will other retailers try a similar strategy.

There are clearly opportunities for Toys R Us to do some interesting things with a tablet.

For example, it could offer customers who purchase a tabeo and the physical version of a board game access to the digital version of the game for free or a discounted price.

However, Toys R Us is likely to face some challenges in the tablet space, including the significant hold the iPad already has on the market. Apple is also reportedly readying an iPad mini that will target some of the audience.

Additionally, Amazon introduced two new Kindle Fire tablets last week with many of the same features as tabeo.

“There are others that could potentially make a run for it and that would make sense,” Resource’s Mr. Shust said. “Best Buy has been rumored for years to be doing something like this.

“When they have a good connection to content, it makes sense,” he said. “This is why the Kindle Fire makes sense.

“But the further you get away from there, it becomes harder and harder.”

For example, Amazon reportedly does not make much money – if any – from selling the Kindle Fire hardware. Where the online retailer makes it money is from the sale of the digital content that users consumer buy via the tablet, such as music, movies and games.

Toys R Us will similarly need to be able to make money from software sales for the tabeo to be profitable, something that is not immediately clear that the retailer will be able to do.

Bad timing
The challenges in the tablet space are significant for a newcomer.

Parents who already own an iPad for themselves and are considering a tablet for a child may prefer to stick with an operating system they already know and not have to deal with the inability to share apps between devices on different operating systems or having to shop for apps from different app stores.

Apple also has a significant presence in U.S. schools already, meaning that a lot of children have been exposed to iPads.

As a result, many children want an iPad because it is cool and may not want a Toys R Us tablet.

Kindle Fire has also carved out a nice spot for itself by being able to offer the content services that many tablet users are looking for.

“The timing of this announcement is unfortunate since, while lower than Amazon’s recently released device and pre-loaded with kid-friendly apps, the Kindle Fire devices from Amazon support parental controls and multiple user accounts meaning that the same tablet that the kids use can be used by Mom and Dad as well, and is only $10 more,” said Chris Silva, mobile industry analyst at Altimeter Group, San Mateo, CA.

“It sounds as though Toys R Us is looking to reinvent how parents currently buy digital media for use on tablets,” he said. “The world of digital media on tablets for children is far from established, however. Apple has a clear lead and also has ties into classroom usage, making its iPad a potential ‘safer bet’ for parents.”

Tabeo is a 7-inch tablet that comes with 50 free preinstalled apps for children, including Angry Birds.

A tabeo App Store features more than 7,000 free apps thousands of apps for purchase, with the selection curated by the Toys R Us team.

“Just being a container for experiences users get other places may not be enough,” Resource’s Mr. Shust said. “If the interface and the digital content felt more branded, this might make the device more competitive.

“But in the end, the question is would a child rather have a $200 iPad mini versus a $149 Toys R Us tablet,” he said.

Final Take
Chantal Tode is associate editor on Mobile Commerce Daily, New York