Will Toys Top Tech for Holidays?

Furby May Be a Repeat Breakout, but Analysts Say Tablets May Do Well This Christmas

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With November just around the corner, retailers are hoping they've got plenty of the season's hottest gifts—whatever those might be.

Analysts and retailers think they will be retro toys, like Furby and Teenage Mutant Ninja Turtles, as will electronics like the LeapPad2 and the Nintendo Wii U. Also showing up on multiple retailers' gotta-have lists: Lalaloopsy Silly Hair Star Doll, Baby Alive Wanna Walk Doll, Nerf N-Strike Elite Hail-Fire Blaster and Beyblade Destroyer Dome Play Set.

Furby is poised to be a breakout holiday best-seller, already topping toy lists from Target , Walmart and Toys "R' Us. After a seven-year hiatus, Hasbro announced in April the furry creature that headed must-have lists in the "90s will return to store shelves in time for Santa's 2012 sleigh.

Adrienne Appell, a spokeswoman for the Toy Industry Association, admitted that even experts "really don't know what the big hit will be until it happens." But she suggested that whatever it is -- and despite the economy—it may be high end, thanks to retailers pushing payment plans. "One of the things we've heard about layaway is it may be driving more expensive purchases."

Walmart, Kmart and Toys "R' Us are all promoting holiday layaway programs -- Walmart for Apple's iPad and HP's Ultrabook PCs. Layaway, as well as aggressive marketing from electronics brands, could provide a much-needed boost to the struggling consumer-electronics space. According to the Consumer Electronics Association, three in four gift-giving adults plan to buy a consumer-electronics product as a gift, with tablets topping the wish list. Companies such as Microsoft, Apple and Samsung have set the tone early with big new-product launches and high-profile campaigns.

Electronics companies are not typically among the top holiday spenders. The two largest, Apple and Microsoft, spent $175 million and $150 million, respectively, during fourth quarter of 2011 -- about half of Macy's outlay during that time period. But given the launch of products like Microsoft's Surface Tablet and Apple's iPad, some analysts are projecting holiday spending from the big electronics manufacturers will be in the billions.

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