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From industry giants Mattel and Hasbro to smaller players LeapFrog and VTech, toy manufacturers are lowering the age ranges for their high-tech and educational offerings at this year's Toy Fair, betting that ``toddler tech'' will help reverse several years of slumping sales.

The toy business's main event, the American International Toy Fair, brought together in New York more than 1,500 toy makers, distributors, salespeople and importers from 33 countries -- all of whom are fighting for a piece of the same shrinking market while grappling with other stressors that have become endemic to the industry.

Among the biggest challenges are the rising costs of energy and raw materials. Toy companies are especially sensitive to rising oil prices, because the business uses so much petroleum-based plastic in its goods. Moreover, the toys are manufactured in Asia, meaning that higher energy prices have caused shipping costs to soar.

At the same time, consolidation at retail means that giants Wal-Mart Stores and Target wield considerable power when it comes to allocating shelf space and setting prices. Those mass-market and discount stores accounted for 54 percent of all retail toy sales in 2005, according to data from NPD Group, a market-research firm. Traditional toy stores represented just 20 percent of the market.

But perhaps most alarming to the toy business is slumping sales, as video games, cell phones and MP3 players compete for kids' attention and parents' dollars. U.S. retail sales for the toy industry as a whole fell 3.6 percent to $21.3 billion in 2005, according to NPD. That followed a decline of 3 percent in 2004.

The toy industry has responded by embracing technology, adding interactivity, creating whole new categories of educational toys and expanding the use of sophisticated electronics in products for kids as young as newborns. Notably, NPD said that sales of learning and exploration toys rose in 2005, adding 6 percent to $400 million.

Part of the strategy is to make kids enamored of their toys and brands at an earlier age; part of it is a response to parents who want playtime to also build cognitive and other skills. But another key element is to create must-have items for which parents are willing to pay a premium.

``The whole world of toys has changed. When we think of toys, we think of the old building blocks, but in today's world with technology (and) computers, the hot toys are the electronic ones,'' said Jim Silver, editor in chief of Toy Wishes Magazine, an influential industry publication.

Finding a hit with a hot high-tech product can help toy makers hold the line on prices, which are usually pressured by industry competition and the ``Always Low Prices'' reason for being of Wal-Mart and its discount-retailer peers.

So it's only natural that an important trend seen at this year's Toy Fair is toddler tech, bringing high-tech toys to kids ages 3 and younger, according to Reyne Rice, a toy-trend specialist with the Toy Industry Association.

From digital cameras and electronic pianos to interactive play mats for infants, toy makers are courting youngsters with offerings far more sophisticated than wooden building blocks.

No. 1 toy maker Mattel's Fisher Price division is introducing its Kidtronics Digital Song & Story Player and its Kid-Tough Digital Camera. The song and story player reads music and plays songs for kids starting at age 3, while the digital camera lets kids imitate Mom and Dad, but comes in a sturdy, rubberized case.

Meanwhile, in the fast-growing educational toy market, manufacturers are rolling out a slew of high-tech products. Fisher Price's I Can Play Piano has been endorsed by the Music Teachers National Association. No. 2 toy maker Hasbro's Playskool business is introducing the Ion Educational Gaming System, in which kids ages 3 to 7 see themselves on TV as they take part in games and exercises that teach early-education skills.

Indeed, interactive educational toys based on plugging a console into the family TV are out in force this year. LeapFrog Entertainment's Little Leaps Grow-with-Me Learning System targets kids under age 3, while the LeapsterTV console extends the franchise to ages 3 and up.

Rival VTech Holdings, for its part, has the V.Smile Baby Infant Development System designed for children ages 9 to 36 months, among other new products.

Jakks Pacific, meanwhile, has TeleStory interactive books, where the CareBears and the family TV team up with the intention of instilling a love of reading.

Newborns may be too young for plug-and-play TV games, but that doesn't mean they're left out of the digital revolution. VTech, for example, has a high-tech toy aimed at newborns, the Explore & Learn mat -- where infants are introduced to numbers, letters, colors and shapes as they touch various parts of an electronic but machine-washable play mat.

The toys are popular not only because they help impart cognitive and emotional intelligence, but also because they involve parents in the process.

``When kids are that little, parents are one of their favorite playthings, so having their parents' time and interacting with their parents is great,'' Rice said.

To an older generation raised on Lincoln Logs and Lego bricks, the high-tech toy world might seem like it's overloading minds at too young an age with digital gadgets and virtual experiences, but to today's children it's a natural part of being kids, according to Byrne.

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