Walt Disney Co is introducing $350 netbooks for children ahead of the holidays, even as other toy companies shy away from expensive items to appease recession-hit shoppers.

The Disney Netpal -- a laptop computer typically used for Internet browsing and e-mailing -- will start selling at Toys R Us stores in the United States and Canada and Amazon.com in late July.

The company's move comes as toymakers such as Mattel Inc and Hasbro Inc, and retailers like Toys R Us, have pointed to demand for cheaper toys, as job losses, the weak housing market and tight access to credit have erased parents' ability to spend freely for their children.

Many analysts have said that selling affordable toys will be a better bet to attract shoppers this year.

This is Disney's first attempt at selling a laptop in North America and comes about five years after the No. 1 U.S. entertainment conglomerate tried to enter the personal computer space with a $1,000 desktop in 2004, according to Disney.

The company's current reach in the electronics segment for kids includes products like Pirates of the Caribbean and High School Musical themed TVs, DVD players, speaker systems, alarm clock radios and boomboxes.

Still, weak consumer spending has hit its consumer products unit's licensing business, which posted a 9 percent decline in sales, and a 24 percent drop in operating income in the fiscal second quarter.

Despite the prevailing need among consumers to save, they were willing to spend more money if they saw value in a product, said Chris Heatherly, vice president of global toys for Disney's consumer products unit.

What parents consistently told us is 'I'm not looking for the lowest price point. I'm looking for something that is good value for money that my kid is going to get use out of,' he said.

Netpal's software lets parents control online safety and browsing content for children, Heatherly said. Aimed at kids aged 6 to 12, it also allows parents to choose who their kids can interact with by e-mail.

The version to be sold at Toys R Us stores is sturdier but comes with less storage space, he added.

Disney is in talks with various other retailers in the United States about selling the netbook, which is being made for Disney by Taiwan's low-cost PC maker, Asustek, Heatherly said.

The company also anticipates selling Netpal in international markets like Europe and Asia by the end of this year, Heatherly said.

Netpal will be one of the more expensive products this holiday season, which has seen toy companies focus on the affordable tag to entice shoppers. Mattel, for example, is selling a $80 Mindflex game on the higher end, while its Barbie and Hot Wheels toys are much cheaper. Hasbro has a $28 toy puppy this year compared to a $180 toy dog in 2008.

(Reporting by Aarthi Sivaraman; Editing by Richard Chang)

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