GADGETS

For nearly two years, designers at Mattel Inc.’s Fisher-Price toiled to hide a maze of copper wires and microchips under the plush red fur of the company’s newest Elmo toy. The resulting “Elmo Live” is its most advanced ever, able to cross its legs, flap its arms and fluidly mimic the television Muppet.

All that wizardry, however, comes at a steep price. Elmo Live will cost $60 – about a third more than last year’s model and higher than the $50 tag that once was the high-water mark for most toys. Elmo Live hits stores as economic uncertainty is gripping consumers, prompting retailers such as Wal-Mart Stores Inc. and KB Toys Inc. to pitch low-cost toys to lure customers.

Higher prices are an inevitable consequence of toy makers’ attempts in recent years to compete with videogames by embracing sophisticated electronics. Coupled with rising transportation costs and labor inflation in China, the result may be the untimely release of high-priced toys.

There is an unusually rich slate of expensive items coming to market this Christmas. In addition to Elmo, Mattel is bringing out a duo of robotic dinosaurs: a $150 toy called D-Rex and another priced at $130 called Spike. Hasbro Inc. is offering a $180 robotic dog called Biscuit that responds to voice commands and wags its tail. Jakks Pacific Inc. is selling $80 night vision goggles.

“When we were talking about it even a year ago, the economy was in a different place,” concedes Mattel Brands President Neil Friedman. Elmo Live still costs “less than a tank of gas,” says Robert Eckert, chairman and chief executive of El Segundo, Calif.-based Mattel. “If you look at it against other sophisticated robot toys, $60 is not a lot to ask.”

Will the more expensive Elmo Live outshine its Tickle Me sibling? Mattel declines to disclose figures on retailers’ Christmas orders.

At Toys “R” Us Inc., Chief Executive Officer Gerald L. Storch says he is optimistic. The nation’s second largest retailer by revenue after Wal-Mart Stores, “always invests heavily in Elmo,” he says.

Wall Street Journal