LeapFrog 2007 Annual Report Download - page 20

Hardware and Software Development
We believe that investment in research and development is a critical factor in strengthening our
portfolio of products. We have assembled a team of specialists with backgrounds in a wide variety of fields
including education, child development, hardware engineering, software development, video games and
toys. We have developed internally each of our current platforms and stand-alone products, although we use
licensed technology if it is advantageous to do so. For example, we use a version of Macromedia’s Flash
player in our Leapster handheld platforms. We also use optical reader hardware and optical character
recognition software from Anoto AB in our FLY Pentop Computer and our Tag reading system.
In 2006, we completed consolidation of our office locations, moving our research and development
offices from Los Gatos, California to our corporate headquarters in Emeryville, California, to better align
our marketing with our research and development activities. As part of our strategy we opened an
engineering office in Shenzhen, China in 2007 to be able to work more closely with our suppliers and to
increase efficiencies.
Content Development
Our content production department has developed large portions of the content for our interactive
books, educational games, and stand-alone products, applying our proprietary pedagogical approach, which
is based on established educational standards. We have developed a portion of our content using licensed
characters such as Disney Princesses, Thomas the Tank Engine, Scooby-Doo, Dora the Explorer, Spider-
Man, SpongeBob SquarePants and characters from the movies Madagascar, Finding Nemo, The Incredibles
and Cars. Most of the members of our content production team have prior experience in the education,
entertainment and educational software or video game industries.
We launched our Developer’s Studio in July 2001, dedicated to creating software tools that help turn
the content designed by our developers into interactive content that works with our various platforms. We
make these tools available to outside developers. Our Developer’s Studio team trains and provides technical
support to internal and external content development teams, and works with our production team to turn our
internally developed content into interactive books and software.
Manufacturing
LeapFrog is committed to designing and manufacturing products that meet applicable safety and regulatory
requirements.
In 2006 we implemented a world-wide quality system that supports the strict European Risk of Hazardous
Substances directive or “RoHS,” which banned certain substances, such as lead and mercury, in the production of
consumer products. In addition, we monitor compliance with standards set by the United States Consumer
Product Safety Commission, or CPSC and the International Council of Toy Industries.
We launched our Developer’s Studio in July 2001, dedicated to creating software tools that help turn the
content designed by our developers into interactive content that works with our various platforms. We make
these tools available to outside developers. Our Developer’s Studio team trains and provides technical support to
internal and external content development teams, and works with our production team to turn our internally
developed content into interactive books and software.
We are subject to the Federal Hazardous Substances Act, the Flammable Fabrics Act, regulation by the
CPSC, and other similar federal, state and international rules and regulatory authorities. For information about
the adverse effects that could result from possible errors or defects in our products, see “Item 1A—Risk
Factors—Any errors or defects contained in our products, or our failure to comply with applicable safety
standards, could result in delayed shipments or rejection of our products, damage to our reputation and expose us
to regulatory or other legal action.” in this report.
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