Electronic Book Readers: The End of An Era Is Near

E-Book Readers Face Inevitable Decline

by Anton Shilov
12/12/2012 | 11:57 PM

After spectacular growth in the last few years, the e-book reader market is on an alarmingly precipitous decline, sent reeling by more nimble tablet devices that have gained the ardent patronage of consumers, according to an IHS iSuppli report.

 

Shipments of e-book readers by year-end will fall to 14.9 million units, down a steep 36% from the 23.2 million units in 2011 that now appears to have been the peak of the e-book reader market. Another drastic 27% contraction will occur next year when e-book reader shipments decline to 10.9 million units. By 2016, the e-book reader space will amount to just 7.1 million units, a loss of more than two-thirds of its peak volume in 2011.

Unknown to consumers before 2006, e-book reader shipments skyrocketed for the next few years after first thrilling readers with a portable device they could take anywhere. From 2008 to 2010, shipments grew from 1.0 million to 10.1 million, up by a factor of 10.

But the stunning rise and then blazing flameout of e-books perfectly encapsulate what has become an axiomatic truth in the industry: single-task devices are being replaced by their multifunction equivalents, in this case by media tablets. While other uni-tasking devices – like digital still cameras, GPS systems and MP3 players – also face similar pressures and battle dim prospects ahead, all have had a longer time in the sun than e-book readers.

In contrast, tablets are enjoying unstoppable growth, mostly thanks to the Apple iPad, which made its appearance in 2010. Tablet shipments will hit 120 million units in 2012 only after two short years of the device being on the market, and 340 million systems are expected by 2016—a magnitude of sales exceeded just by mobile handsets.

Dissections made by the IHS of a wide range of e-book readers and tablets alike confirm that e-books are much less expensive to build. For instance, the 7” Amazon Kindle reader, released in late 2011, has a total bill of materials cost of $84, while the recently released Nexus 7 tablet from Asus is almost twice as high at $153.

To try to maintain its market, e-book readers are likely to continue to sell at cost or even less in the future. Industry rumors speculate the Txtr Beagle reader, an ultra-low-cost model with a 5” screen, potentially selling for as little as $13 alongside operator subsidies in 2013, less than the cost of the display alone. Such extremely low pricing may serve to prolong the life of the e-book reader market for a little while, IHS iSuppli believes, but the devices on the whole will not regain the popularity they once had.  In such a context, Amazon is more insulated than other e-book reader manufacturers, because the giant bookseller can recoup some of its losses through the huge sales generated from e-books and other content available through its online store.

Sadly for e-books, which looked like the “Next Big Thing” just a few years ago, its moment of glory came and went all too quickly, the expectations of explosive growth suddenly quashed by the arrival of a much more agile rival.