Wi-Fi Robot Bunny Wants to Take Over America

In the Darwinian evolution of electronic companions, first came the speaking doll, then the Tamagotchi virtual pet, then Sony's (SNE) short-lived AIBO robot dog.

Now, it could be the dawn of the Wi-Fi rabbit era.

The plastic bunny with ears like TV antennae can read out e-mails and mobile phone text messages, tell children to go to bed, alert one to a stock collapse and give traffic updates by receiving Internet feeds via a wireless Wi-Fi network.

"It gives a visual and vocal representation of what is on the Internet," explained Paul Jackson, an analyst at research house Forrester. "It is also a nice way of making physical your relationship online with people."

The bunny, which stands 9 inches tall and has a white cone-like body that lights up when it speaks, is called Nabaztag, which means rabbit in Armenian, its creator's mother tongue. It can also wiggle its ears and sing songs.

French entrepreneur Rafi Haladjian, who conceived the idea, says the rabbit sometimes carries more sway over children than their parents and can help men who have misbehaved win forgiveness from angry partners.

"It is sad, but true," he said.

Nabaztag costs 115 euros ($148) in France, 80 pounds ($152) in Britain and $150 in the United States. It is made in Shenzhen, China.

Since its market debut last year, 50,000 Nabaztags have been sold in France, Britain, Belgium and Switzerland, and Haladjian hopes to sell 150,000 by the end of this year.

The businessman is now looking to conquer the United States, where he only has a tiny presence, and is gearing up for the December holiday shopping season.

Last December, Haladjian appeared on nationwide U.S. television for three minutes and received 350,000 online information requests.

"The only problem was that we had zero bunnies, we had sold them all already and we had not even started selling them in the United States yet," he said.


Jackson is among several analysts who predict the Nabaztag will find favor among the well-heeled and technology-savvy as it benefits from the spread of Wi-Fi networks around the globe.

Wi-Fi technology is the latest must-have in many mass market consumer goods, from mobile phones to personal digital assistants, laptops and TV set-top boxes, analysts say.

In Western Europe's seven largest markets, on average about 6 percent of households have a Wi-Fi home network, while in the United States, the rate is between 12 percent and 14 percent, according to Forrester.

Analysts say one of the reasons Sony's AIBO dog was discontinued this year was that its technology was too complex and the robotic animal too pricey.

Nabaztag, which performs basic tasks, relies on relatively simple technology — Wi-Fi and online software and filters.

"I think it [the rabbit] is a useful gadget and a new way of communicating," said one Paris-based telecoms analyst at a international brokerage who is planning to buy one but did not wish to be named.

"If I send a text message to my wife and she is busy cooking, she will hear it without having to check her mobile."

But some say simplicity may be a weakness in a sophisticated market where some want all the latest bells and whistles.

"The problem with targeting this tech elite is that they are very fickle," said Jackson.

Tamagotchi fell out of favor with many children after a while because its functions were repetitive, analysts say.

Haladjian says the key to Nabaztag's longevity will be constant innovation and finding new applications as the Internet evolves. But competition is heating up.

Ambient Devices, a spin-off from the Media Lab at the Massachusetts Institute of Technology, is one of several rivals putting Internet-based communicating devices on the market.

Ambient sells a lamp ball that glows different colors to display real-time stock market trends, weather and pollen forecasts for $150, excluding shipping costs.

But Haladjian is confident the French rabbit can compete.

He expects sales to rise to 400,000 in 2007 and total around 2 million by the end of 2008.


Like Internet phone service provider Skype and Apple's (AAPL) iPod, Haladjian is trying to create a community of users and a critical mass that will generate stable revenues and cash flows.

Nabaztag's basic Internet feeds are free, such as weather forecasts, stock market performance and selected e-mail reading.

But sending a text message and making a call cost the sender extra. Charges for text messages drop if the receiver is subscribed to a premium service.

"Our business model is a little bit like Skype," says Haladjian. "We offer a free service but charge for premium ones."

The rabbit is made by French company Violet, 55 percent owned by Haladjian and 30 percent by Banexi Ventures, a private equity arm of French bank BNP Paribas.

Two months ago, Haladjian raised between 5 million to 8 million euros — he would not give a precise figure — from Banexi, to finance expansion.

He is also planning to introduce other "smart" devices and contribute, in his own way, to the natural evolution of inanimate objects.