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VTech have announced two new educational tablets for 2013, the InnoTab 3 and InnoTab 3S. Despite the very similar names these tablets have quite a few key differences.
The InnoTab 3 is the entry level model with a low price point. The InnoTab 3S is the premium model with additional features (but the competing LeapPad Ultra is an even more of a premium model, at a higher price.)
The focus for both the 3 and 3S is value for money while still giving access to a wide range of educational titles and features.

Screen Size

One of the key differences between the two tablets is the size of the screen. The InnoTab 3S retains the 5' screen size of last years InnoTab tablets. Whereas the InnoTab 3 has a smaller 4.3' touch screen leading to a smaller, lighter and less expensive device.
Note that screen sizes are measured across the diagonal. The smaller InnoTab 3 screen is just a little larger than the screen on many smart phones (but lower resolution.)
My preference would be for the 5' screen unless you highly value portability or need to keep the cost down.

Wifi

Wifi will be an important difference for many. The InnoTab 3S allows you to download apps and sync content wirelessly. It also adds text-messaging features that enable kids to communicate with parents on their smart phone or other kids on their InnoTab 3S tablets. And there's even web access for child-safe websites approved by VTech or parents.
The InnoTab 3 does not have Wifi and must be connected to a computer to donwload content and sync. It's still a useful device without internet but children may outgrow it sooner. On the other hand, some may prefer their children to stay focused on the educational content and not have the distraction of wider web access (albeit controlled.)

Power

Another key difference is how the devices are powered. The InnoTab 3 uses 4 AA batteries. (We have successfully used rechargeable batteries with our InnoTab 2 and not found it very inconvenient to change them.) You will be able to buy a separate rechargeable battery pack for the InnoTab 3 but that brings its price close to that of the 3S.
The InnoTab 3S comes with a rechargeable battery pack and an AC adapter that can be used to charge the battery pack while it's inside the device. This makes charging similar to a regular tablet or smart phone and many parents find this more convenient. It's certainly cheaper than using disposable AA batteries too.

On-Device Memory

The InnoTab 3 has 2GB of on-device storage whereas the InnoTab 3S has 4GB so twice the amount. This storage is used for downloaded apps, games and eBooks as well as photos and videos.
Both tablets support the use of a micro SD card for additional storage so the on device memory is less critical. If you want to load lots of videos for your child to watch on either device then the SD card is the way to go.
Neither device comes with an SD card so this is an additional cost.

Controls

Both tablets have a touch screen, microphone, tilt sensor and a new D-Pad. The design of the D-Pad is different on the two tablets but they both introduce physical arrow controls which are useful for some games and navigation functions.

Included Apps

The InnoTab 3 comes with 16 apps (some must be downloaded once you have the device) whereas the InnoTab 3S comes with 20 apps.
I haven't found a clear statement of the apps included for each tablet so I've done my best to pull to info together here, but note that these could change, and I'm interpreting the product descriptions as best I can. Please confirm if there's a specific app you really want.
Both tablets include Wondercam with photo special effects, Art Studio, Magical Bean Stalk Game, Utility suite with Calculator, Clock, Calendar, Notes and Friends. And both also have apps for working with video, photos, and eBooks. There's also an included music player app for both.
There's a new H2O Go! science-themed game which makes use of the D-pad. This is included with the InnoTab 3S and also listed as included on the InnoTab 3 product page (though not mentioned elsewhere.)
The InnoTab 3S specifically mentions that it comes with a Learn, Create and Play cartridge which includes H2O Go!, the What's that Noise? ebook and the Color and Pop activity.
The Read, Play and Create cartridge is also mentioned for the InnoTab 3.
The InnoTab 3 also comes with one free download from the Learning Lodge. (Free downloads have not yet been specified for the 3S.)
The InnoTab 3S includes additional apps related to its Wifi capability.
One of the additional apps for the 3S is Kid Connect which makes use of the Wifi capability to provide messaging.
There's also the Wish List maker which also uses wireless to allow kids to browse the download center and request content that they would like parents to purchase.
I think the web browser makes up one more of the additional apps on the 3S.

Ongoing Costs

Both tablets will have ongoing costs in terms of any additional apps and cartridges that you choose to purchase. Note that you can reduce this cost by purchasing a VTech Learning Application Download Card which is often available at a discount. I've found that our kids also got a lot of mileage out of the apps that came with their InnoTab.
The InnoTab 3 has ongoing costs in terms of batteries unless you upgrade to the rechargeable battery pack. (We use regular rechargeables with our InnoTab 2 though.) The InnoTab 3S has a rechargeable battery pack so you just need to consider electricity costs.
The InnoTab 3S comes with a one year Kid Connect (messaging app) Basic subscription. It looks like you will need to pay to get access to Kid Connect once your one year subscription runs out. There will also be a premium subscription with additional features which will be included in a Deluxe add-on pack available in the Fall.

Age Recommendation

VTech recommends both devices for the 3-9 age range. I think that the web browser on the 3S will give it more appeal and longevity with the older end of this age range.

Price

The InnoTab 3 has a MSRP of $69.99 and the InnoTab 3S has a MSRP of $99.99 in the US.

Value for Money

I think the InnoTab 3S offers better value for money overall with its Wifi features, larger screen, more storage and rechargeable battery. You and get quite a lot extra for your additional $30.
But, if you can't afford the InnoTab 3S or you can't justify spending so much money, the InnoTab 3 still offers a lots of capability and a light and portable device. You still get a lot of included software with the InnoTab 3 so kids will have lots to do before you need to by additional content.
Buy: InnoTab 3 (blue or pink) @ Amazon
Pre-Order: InnoTab 3S (blue or pink) @ VTechKids.com

VTech Kid Connects lets you keep in touch with your child even when you are away from home.
VTech Kid Connect works with VTech's InnoTab® children's tablets* to allow kids to communicate between their InnoTab®, Android phone or other smartphones. All contacts must be approved by parents before any communication can take place. It's completely safe for your child!
NOTE: Kid Connect is meant for communication between an InnoTab® and a smartphone. Smartphone users cannot add other smartphone users without an InnoTab® user in the group.
WHY USE KID CONNECT?
• STAY CONNECTED WITH YOUR CHILD ANYTIME, ANYWHERE. Kid Connect uses an Internet connection to let you communicate with your child even when you are away from home - anywhere in the world. Parents can also add family members and friends to the child's Friends List, so grandparents can stay close too.
• KID SAFE. All contacts must be approved by parents before communication can take place. Users who are not on a child's Friends List cannot contact your child.
• GOOD FOR ALL AGES! Even the youngest kids can use Kid Connect to share voice messages**, photos**, drawings, stickers, and pre-recorded messages. And as children grow, they will be able to share text messages too!
• GROUP CHAT. With Group Chat, your child can communicate and share with multiple family members or friends at the same time.
• SHARE MOMENTS. Parents can easily share photos** or drawings from their children and post them to social media sites with a single touch.
• IT'S FUN! You can customize your Kid Connect avatar with your photo, or choose one of several cartoon designs. There are also fun stickers and pre-recorded messages. Your child can even use the voice changer** to record a robot voice or a mouse voice!
USING KID CONNECT
Parents:
One parent will receive a Kid Connect ID and password when they register their VTech device. That parent is considered the account owner and can use this app to manage their child's Friends List. They can:
• Send friend requests on behalf of their child
• Accept or reject friend requests their child receives
The parent who is the account owner is automatically added to their child's Friends List. The other parent and other family members will have to sign up for a separate account and be added to their child’s list as a Friend.
Other Family Members:
You must get parental approval before you can contact a child. Once you've signed up for a Kid Connect account, let the child's parent know your Kid Connect ID so they can send you a Friend request.
* Kid Connect works with InnoTab® MAX and all InnoTab® 3S models only.
** A parent must consent to the Children's Online Privacy Protection Act (COPPA) before their child is allowed to send photos and voice messages. Log in to your VTech Parent Account on Learning Lodge for instructions.
For more details about VTech, please visit our website:
http://www.vtechkids.com/