Imagine a plush animal toy that can recognize its child-owner by voice and appearance, knows his or her dislikes, and can engage in complex conversations for hours. Consider that for this toy to function, it needn’t be hooked up to a computer by a phalanx of wires. Who can claim ownership of such a product that-in theory-makes today’s Furby look like yesterday’s Tickle Me Elmo? Mattel? Hasbro? Some half-crazed toy inventor toiling away in obscurity? Try Intel.

The computer chip manufacturer, better known for its dominance in the microprocessor market, recently blue-skied this brave new plush (which, in the abstract, operates by communicating with a PC via radio frequency) at an information summit held at Intel HQs in Santa Clara, California. The summit, which drew a who’s who in the world of toy design, is part of an ongoing series of info sessions Intel began organizing about a year ago, the goal of which is to introduce the potential toy applications of new technologies such as voice recognition and vision as input. The idea for the summits, which are held every few months and are open to all interested parties, grew out of Intel’s participation at MIT Media Lab’s Toys of Tomorrow (TOT) consortium in 1997, a research program whose mandate was to bring together leaders in the toy and technology industries to imagine ways in which the digital revolution would change the nature of toys.

‘While we felt TOT spoke to a lot of the academic aspects of working with toy design, what we wanted to do was form a group that addressed how companies could put current and emerging technologies to work for them as soon as possible,’ says Rand Potter, a PC Enhanced Toy (PET Group) Segment Manager at Intel. Since the initial summit, other companies, such as tech think tank Interval Research, Motorola and Philips have taken turns sponsoring the meetings.

Though it might not sound like it, Intel’s interest in the toy biz has little to do with corporate altruism. Its main goal, Potter admits, is to facilitate the creation of consumer products-in this case, toys-that will grow the mid- to high-end PC market and, by extension, the demand for its high-powered chips. (Intel maintains four similar divisions within the PET Group that work with producers of kids software, creativity software, the music industry and coin-operated video games to achieve the same end.)

‘You have to understand Intel’s position; they’re getting their butts kicked in the sub-US$600 PC market, which is the fastest growing sector in the PC business,’ says Dave Tremblay, a senior analyst at InfoBeads, a PC market research firm based in La Jolla, California. According to InfoBeads’ most recent figures, the sub-US$600 PC market accounted for 20% of retail PC sales in February, which is up 15% from October. It’s a sector, adds Tremblay, that Intel has largely been shut out of because the manufacturers of low-end PCs have opted to use cheaper, albeit slower, microprocessors to save on cost. For that reason, he says, Intel has a vested interest in promoting high-powered, memory-sucking applications, such as Mattel and Intel’s Play X3 Microscope and Me2Cam, that allow consumers to edit video or digitally manipulate photographs on a PC. (Not surprisingly, Intel’s newest chip, the Pentium III, enhances video and multi-

media applications.)

The Me2Cam and the X3 Microscope drew rave reviews from showroom-weary attendees when Intel debuted them at Toy Fair in February. But despite the positive initial industry buzz, Intel isn’t planning to move into the toy business in a major way, assures Potter. John Taylor, a toy analyst at Arcadia Investments, based in Portland, Oregon, commends Intel’s strategy, seeing its role as more of an enabler in the toy industry. ‘With consumers demanding more high-tech computer toys, it makes sense for a company that has expertise in the capabilities of computers to collaborate with a company that knows what makes a great toy.’ According to Taylor, Intel and Mattel are currently working on more toys, though neither company has issued release dates for the products. Intel’s agreement with Mattel does not preclude it from collaborating with other toy companies, says Josh Weinberg, a media relations magager at Intel.

‘We’re always on the lookout for new opportunities, but we’re not actively looking to duplicate what we’ve accomplished with Mattel with 12 other companies,’ says Weinberg.