Sunday, September 29, 2013

Divide Appears in Markets for Tablets and e-readers

In March, market research firm IDC said it expected e-reader shipments to grow modestly in 2013 and 2014 after peaking at 26.4 million shipments in 2011. The bifurcating market of tablets, smart phones, phablets, etc. is positioned for Barnes & Noble to dominate the low-end e-reader market where they have better technology, cheaper prices, and far and away the best selection of content. Apple, Samsung, Google and others will compete for the $200+ per device market. Amazon is increasingly forced to compete on the higher end as they push for their tablets to be positioned as e-catalogs. iPhone users will have iPads and the rest of the market will be a crapshoot. The e-readers are about reading, not watching reruns of TV series. Amazon, we expect, has bigger fish to fry (e.g. Wal-Mart) than either the book or the pad markets.

In late August, IDC issued a slightly lower forecast (227 million) for 2013 worldwide tablet sales but continued its optimistic prediction for 2017 of over 400 million units with up to 50% of sales in emerging markets, especially in Asia. Tom Mainelli, IDC Research Director said, "We expect average selling prices to continue to compress as more mainstream vendors utilize low-cost components..." IDC analysts also noted the slow rise in tablet adoption in education markets. This split of the tablet market from the e-reader market will continue as applications involving primarily print will be predominantly displayed on e-reader devices.

On the e-reader hardware front, Taiwan-based E Ink Holdings—the display supplier for Amazon, Barnes & Noble, and others, reported a 46% decline in revenues y-o-y for the 2nd quarter of 2013. E Ink offered guidance that they expect their global e-reader shipments to be around 10-15 million units. Although the company reported a net loss over $33 million for Q2, they expressed optimism about a pickup in demand for the rest of 2013. “Customers have put off their new product launches to the Q3 from Q2,” the CFO told investors, “There is enormous growth momentum to arrive in the third quarter…”. (Taipei Times) Chen, the CFO, added that revenue is expected to at least double this quarter, as customers were scheduled to ship new e-readers for the holiday shopping season. Note: E Ink has worked with B&N, Amazon, Sony and others to use the E Ink technology. "Vizplex" is used by Nook, Kindle 2, txtr Beagle and Kobo Mini e-readers and "Pearl" by current Kindle models, NOOK Simple Touch, Kobo Touch, and the Sony PRS-T1.

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