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Post CES Reflections: Yes, eReaders are Doomed* (Kinda)

I’m sitting here 2 days after CES 2012, and I thought I’d take a moment and reflect on a trend I’ve noticed in the ereader market.

A couple weeks back there was an editorial on The Loop, and I’m sure you’ve heard about it. Matt Alexander argued that "the eReader as we know it is doomed". I disagree with most of his arguments (and some were technically flawed), but that doesn’t mean his point is invalid.

For certain values of the word ereader, and for certain values of the word doomed, Matt was correct.

But first let me talk about how he was wrong. First, Matt conflated ereaders with E-ink screens as being the whole of the market, and then took the tech limitations of E-ink as being a major flaw. His mistake was that he ignored LCD based ereaders, ignored pricing and weight factors, and that he ignored niche fulfillment.

Price and weight were obvious missteps and he should have caught them.  You can now get a Kindle for under $80 and you can get a free Nook. Either device weighs so little that there’s no reason not to carry it along with your tablet.

And then there’s the niche issue; no screen tech other that E-ink fills the need of the heavy reader as well as E-ink.

No, it doesn’t do color, but neither did the vast majority of my paper books. As a direct replacement,  E-ink’s lack of color doesn’t matter. Matt also said that the printed word is going to evolve, but can you honestly say that the simple basic format of the novel will go away? I don’t, and ereaders can fill that niche better than anything.

Matt also based one of his arguments on some marginally irrelevant technical claims about E-ink. He said that the screen refresh was slow. While this is true when compared to video on LCD, most reading apps which act as direct replacements for current ereaders aren’t a whole lot faster at turning the page. Some are marginally faster than E-ink, but there’s no amazing speed difference anymore.

Matt also was also blinkered by his focus on hardware; he neglected to consider the features recently launched by Amazon (X-Ray, Kindle Cloud, backing up your annotations). Those are amazing features, and while the Kindle apps will get them, the Kindle hardware got them first.

Nevertheless, Matt was somewhat correct; he just had the reasons wrong. We’re not going to see any new innovators enter the US ereader market any time soon, and we might never see them. Amazon and B&N brought the price of an ereader down to under $80, and that leaves nothing for a new competitor to make a living on. Heck, the Nook Touch is free now. Who can compete with that?

And even the smaller ereader makers already in the market have moved over to tablets. Pandigital made a big splash in 2010 with the Novel, but by CES 2011 they had already decided to move into tablets. The same goes for E-Fun and Skytex, 2 other smaller gadget companies. In fact, there are signs that all 3 got out of the ereader market as fast as they got in. And even Onyx, Jinke, and Gajah, 3 mid-size but still solidly second tier Asian ereader makers, have gotten into tablets.

There’s just no market in the US for ereaders anymore. And that leads Matt’s next goof; the US is not the whole of the ereader market.

My prediction for ereaders is that we’re not going to see outside innovations in the US market; we might still see them in other markets. Look at where you can buy a Spring Design Alex, a dual screen ereader (Russia). Look at where the Entourage Edge is still in use (Russia). Look at where the Mirasol devices have launched; there’s no market for them in the US but there are possibilities elsewhere.

But let me add one more caveat. I expect that we’re still going to see Amazon innovate in the US market; look at what they announced in November. In what is a complete negation of Matt’s argument, Amazon launched no less than 2 ereaders. They now sell 3 ereaders and a tablet.  Clearly Amazon doesn’t think ereaders are doomed.

Still, I expect to see that most of the great new features for ebook reading are going to happen in the apps realm. In fact, that’s already happened (thus making the prediction irrelevant). Look at the whole slew of aggregators, sharing apps, and other novel spinoffs that were launched in 2011. I expect it to continue.

So in some ways Matt was correct. But if you take the word "doomed" to mean that the ereader will die out (or even shrink in terms of units sold), then no, I believe he was wrong. Show me an $80 tablet that can do the Kindle’s job as well as the K4 can, and then I’ll change my mind.

And one final point. We’re only in the dawn of the digital reading age. This age is so young that we don’t really have enough of a history to make any reliable predictions. That’s why I think it better to draw predictions from the history of the print industry. That should lead you to realize that tablets won’t kill ereaders any more than magazines killed textbooks or  novels killed coffee table books. All coexisted quite nicely (right up until digital reading came along).

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karen wester newton January 15, 2012 um 11:21 am

If you look far enough out, every piece of technology is "doomed" in the sense that eventually it will evolve into something else. The only real question is how long does it have. I think e-ink ereaders are useful enough that they will be around for a good while. I also think Alexander was trying to be controversial when he gave his post that headline. And, of course, it worked.

Leslie D. January 15, 2012 um 11:38 am

Great article Nate! Nay sayers just love to hear themselves talk I think.


Juan Chulilla January 15, 2012 um 12:41 pm

There is a pending evolution: heavy writers really would appreciate a "digital typewriter", an ereader connected to a keyboard (more easily with a USB host) for simple and eye-friendly text editing.

Just imagine

Just imagine

Your eyes would be as strained as they do with a paper when you write, and you could write perfectly in a beach, park or anywhere in the real world without any solar light problems nor difficulties.

I have been contacting once and again different vendors in order to inquire or propose the idea of digital typewriter. Nowadays you can write using a tablet and a usb keyboard, but a tablet display is backlighted and as friendly to the eyes and as readable under the sun as a laptop.

ereaders doomed? Is there margin for their evolution? In fact, an ereader has capabilities that a tablet doesn’t have: outdoor readability, huge autonomy, blissy-eye-friendliness

yuzutea January 15, 2012 um 2:37 pm

Isn’t this just an update of the word processor device?

yuzutea January 15, 2012 um 3:00 pm

Agreed. I think the e-reader is not going to die in the next five or so years.

Screen technology is progressing slowly (look how long it took Mirasol to get to market), and the battery life and weight of tablets is nowhere near e-ink devices.

Amazon’s philosophy of lowering prices will probably ensure a bright future (at least for the short term) for the e-ink reader in the US. I wonder by Christmas this year how much the cheapest Kindle will cost.

fjtorres January 15, 2012 um 5:02 pm

I would expect some further price drops until the US eink reader market plateaus and settles down for the long haul, but I doubt we’ll see anything dramatic *this* year.

Amazon has been dropping prices, yes; but mostly in response to competition (Nook, primarily). They’ve reached a point that Kindles can be used to prop other Amazon products (Audible, online deals&ads, Prime).
The aggressor on pricing has been B&N and we’ll soon see what that is "buying" them in the longer term. Depending on how bad things are at B&N they may no longer be in a position to push on pricing. And, for all the FUD about Amazon selling everything at a loss, their Kindle pricing appears to be at breakeven or slightly above and they haven’t given any signs of sales shortfalls. Of course, they have the advantage of expanding worldwide sales to offset any (hypothetical) US market issues…

Without Nook’s price pressure, Amazon might simply hold their price points until the underlying tech forces it.

Peter January 16, 2012 um 2:21 pm

"And, for all the FUD about Amazon selling everything at a loss, their Kindle pricing appears to be at breakeven or slightly above and they haven’t given any signs of sales shortfalls."

Selling at a loss causes an earnings shortfall, not a sales shortfall.
Amazon HAS seen a definite earnings shortfall, to the extent that they are only breaking even this Christmas. If they continue to chase Barnes and Noble down, they will start to LOSE money.

And Amazon would be well advised to duck out now.

Driving Barnes and Noble to bankruptcy will not stop the nook, John Malone will simply purchase the nook asset using one of the NINE other companies he controls and keep right on rolling. If that companies goes bankrupt, EIGHT remain. And he’s constantly spinning off new ones.

Get the picture?

Jim January 15, 2012 um 8:51 pm

The Nook Touch isn’t "free." You can get one included with a 1-year New York Times subscription for the Nook, but that costs $239.88. In essence, the Nook is still $99 and the subscription is discounted to $140.88.

Nate Hoffelder January 15, 2012 um 8:57 pm

And the Kindle isn’t $80, either, but that’s what everyone says.

Tyler January 15, 2012 um 10:55 pm

So offers is $79.

curiosity killed the… January 16, 2012 um 9:49 am

technically the kindle still is 80 bucks with the offers you just have to deal with the ads. thats rather different than physically doling out 240 bucks for the nook over a year long subscription period. its irked me for years when phone companies call subsidized phones with 2 year contracts free and you wind up paying $3-400 for the privilege of using it. soon as i saw the nook "deal" a couple days ago i thought damn i cant believe people are actually buying into that lie.

Jim January 16, 2012 um 11:01 pm

Well, it’s a great deal if you were planning to subscribe to the NYT anyway. But it’s not a good deal if you’re buying the newspaper just to get the Nook.

Tyler January 15, 2012 um 11:01 pm

The future of e readers isn’t the readers but tablets that you can read on. Look at music. It really has not changed since records first came out just how you listen to them. Music Videos should have crushed them because you saw the artist sing and do a story around them. We went from records to tapes to Cds to MP3s and while the format has changed the music experience is essentially the same. You are listening to something recorded.

I don’t think interactive books will dominate in the long run. People just like to read just they same way they like to listen to music. We are reading here after all. We all surf the internet and read articles. It is just replacing newspapers and magazines but many people prefer to read than have someone read the story to them. It uses your imagination and connects you that no other form can.

Tipi January 16, 2012 um 9:42 am

Hey Nate. Did I miss something? What do you mean by "get a free Nook"?

Nate Hoffelder January 16, 2012 um 9:56 am

last Monday B&N announced a new bundle deal with NYTImes, People Mag. You can get a free Nook with a one year NYTImes subscription.

Tipi January 16, 2012 um 1:34 pm

Thanks Nate! Good news!

CJJ January 16, 2012 um 10:29 am

The ereaders' raison d’etre is digital books. Ereader sales will forever mirror the sales of digital books.
For mass appeal to really kick in, some of the major issues surrounding digital books needs to be sorted out. Cheap ereaders alone will not drive digital book sales. DRM has to be sorted out for sure, but more importantly pricing. Older books at $9.99, $10.99 or $12.99 doesn’t make sense when current releases are $10.99, $12.99 or $14.99. The paperback model works for print books and should be adopted to digital books. When a book goes to paperback, the digital version should receive a significant discount as well.

Tyler January 16, 2012 um 9:03 pm

Keep in mind that this is just year three of Age of E Readers. Things really did not heat up until the Nook was released. Before that, it was just Sony and Kindle pretty much here in the US and I don’t think Sony was a huge hit at the time. Wait another few years while the pace for e readers and tablets keeps accelerating.

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