Ebook Readers: Sustainable Product Category Leaders Or Sooner-Or-Later Bottom Feeders?
I’m going to wrap up my coverage of last month’s Freescale Technology Forum by beginning with a story of what I observed on the flights en route to it. As I previously mentioned, very few folks were tapping into their under-seat power outlets, far from the in-air Wi-Fi service (though Aircell claims it’s content with the so-far adoption rate). But both of the other people in my row-of-three-seats were listening to music on portable devices, as were all three folks in the row directly in front of me (and as were plenty of other folks on all of the flights). Most of the hardware I saw in use was Apple-branded. And all of the Apple-branded gear was iPhones (presumably in Airplane Mode); nobody I saw had a dedication-function iPod of any generation or flavor.
I passed along this tale to the participants in a Tuesday afternoon panel session I attended, focusing on the future of consumer electronics technology. Specifically, I directed it at Sriram Peruvemba, the Vice President of Global Sales and Marketing for E Ink, along with Glen Burchers, Freescale’s Consumer Segment Director. Both companies have placed big bets on the continued viability of the ebook product segment, the former by developing tailored displays, the latter with function-customized CPUs. But, I suggested, the panelists should consider (and extrapolate) my to-conference observations as a guide to the likely future of standalone portable electronics devices in the face of mobile phones’ inexorable integration onslaught.
Why then, I asked the panel, shouldn’t I assume that the same thing will eventually happen to standalone ebook readers as multi-function tablet computers become more pervasive? Reaching into my satchel, I pulled out my iPad as an example of the potential trend. I admitted that it’s more expensive than an ebook reader, but I suggested that this was in no small part a reflection both of the ‘Apple tax’ and of the comparatively low current product shipment volumes. And yes, I admitted that the iPad’s color screen was overkill for traditional monochrome books, and that the LCD directly factored into the tablet’s beefy battery allocation. But on the other hand, I pointed out that I worked for a company that specialized in glossy color print magazines, whose reproduction was optimal for LCDs. I’d seen the pseudo-color demonstrations from E Ink at SID, I told Veruvemba, and they just wouldn’t cut it. And as traditional books morphed into tablet-optimized variants with embedded graphics, video clips and the like, they’d gravitate towards LCDs and OLEDs, too.
Further to my prior cost comments, I noted that one day earlier, both Amazon.com and Barnes & Noble had dramatically slashed the prices of their ebook readers. Wasn’t this, I suggested, indicative of eroding interest in the product category as the iPad and its ilk gained prominence? What of the fact that both companies also offered ebook reader programs for the iPad, tied to the vendors’ online stores; weren’t they hedging their bets in doing so? And what would the looming entry of advertising revenue-subsidized tablets based on Google’s Android and Chrome O/S do to the landscape; wouldn’t the likely resulting price plummet for tablet computers decimate the ebook reader market?
The responses weren’t particularly profound, but they still bear passing along. It was apparently too soon for Peruvemba to tip his company’s hat by revealing the higher-contrast Pearl display evolution that appeared one week later (the Kindle DX also notably underwent an iPad-reminiscent white-to-black case color transition versus its Kindle family precursors). But what he did suggest was that the company was by no means putting all of its eggs in the ebook reader basket; that plenty of other paper-replacement and other applications existed which would fund the company’s fortunes for years to come even if the ebook reader category were to evaporate.
Both he and Burchers also suggested that there was still plenty of room for ebook reader manufacturers to further reduce costs (therefore prices, therefore continuing to segment themselves separate from tablet computers) and still turn a profit. This would especially be true if (as presumably is the case with many if not all of the companies who both sell hardware and offer online stores) the initial hardware cost outlay is subsidized by subsequent content sales. A figure of $99 or less was specifically bandied about, albeit without an associated timeframe. But both panelists sported Cheshire Cat-like grins as they spoke on this particular topic, suggesting to me that the sub-$100 threshold would be reached sooner versus later.
Perhaps the most interesting observation to my mind came from Warren East, the CEO of ARM, who was in attendance by virtue of the fact that Freescale had just introduced Kinetis. East pointed out that the electronic book reader hardware-and-software product plethora was only the latest example of a longstanding consumer electronics technology trend; flood the market with a diversity of products at different feature set and price points [many if not all of them, this editor is compelled to point out, conveniently powered by ARM processors] and then ’see what sticks’.
And in closing, I’ll point out an upbeat sign; not only did I observe a lot of iPhone toters on all four of my flights that week, I also noticed a lot of folks carrying around Kindles and their kin. Many of those people were, shall I say, of the gray-hair persuasion. When a elderly demographic that historically shuns new technology (and adores paper-printed content) embraces the ebook reader, that’s an encouraging sign. So now I’ll turn the microphone over to you, readers. Does the standalone ebook reader market have ‘legs’ for the long term, or not, and if so what will it take to ensure that such a forecast indeed comes to pass?