Not content with letting Amazon dominate the $200 tablet category, The Wall Street Journal reported that Toys ‘R Us announced it would soon sell its own Android-powered tablet geared specifically towards children. The $150 “Tabeo” will start hitting the company’s retail stores Oct. 21 with preorders already being accepted through Toysrus.com. The report noted Toys ‘R Us, which is in its second year of profit declines, already has competition in the tablets for children market. Some of the leading kids’ tablets, such as Kurio 7, Meep and Lexibook, have each recently been discounted to $150 to match the price of the upcoming Toys ‘R Us Tabeo. It appears Toys ‘R Us plans to sell a tablet closer to the Kindle Fire than the LeapPad, equipped with well-known, preloaded apps and a marketplace with over 7000 apps, but that device was also just recently dropped to $169 during Amazon’s unveiling of the new Kindle lineup:

The Toys “R” Us tablet, which uses Google Inc.’s Android mobile operating system, more closely resembles an adult tablet; it comes loaded with 50 free game applications, including popular titles such as “Angry Birds,” and the retailer has developed its own app store with 7,000 titles… Focus groups of parents and children prompted the company to include features that allow parents to control what websites their children visit and how much time they spend playing with the tablet.

The device will pack 4GB of flash memory (expandable via microSD), 1GB of RAM, a 1GHz ARM Cortex A8 processor, and run Android 4.0 Ice Cream Sandwich. Also included: USB 2.0, Mini HDMI out, a built-in speaker, microphone, G-sensor, and front-facing camera. Toys ‘R Us said the display is a 7-inch capacitive, TFT LCD with 16 million colors and a resolution of 800-by-480. Battery life: 10 hours in normal usage, 6- to- 7 hours of video. Parental controls include filters to “block 27 predetermined categories of content, and parents can choose additional sites to block and can select specific online content to unblock.”

There is, however, substantial risk for Toys ‘R Us if the tablets do not sell:

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If the Tabeo doesn’t sell well, Toys “R” Us will have a problem. Toy makers often guarantee the price of their products and will make up the difference if retailers have to discount the toys to goose sales. “The downside to private-label products is if they flop, and have to be discounted, the retailer can’t beat up the manufacturers,” said Sean McGowan, a toy analyst at Needham & Co. “That’s not an insignificant part of the toy business.”;