Future for e-reader market is a sad story

The nascent e-reader market may be on a strong growth curve at present, but the sector’s days are numbered with strong competition coming from a wide range of consumer devices.

Research released on Thursday by Informa Telecoms & Media forecasts that e-reader sales are expected to peak at 14 million in 2013, before falling by 7 per cent in 2014.

This decline will be driven by a shift away from dedicated e-readers – think the Amazon Kindle and the Barnes & Noble Nook – towards multifunction device types like mobile handsets and tablet form-factor devices including the Apple iPad. It strikes telecoms.com that Android will be one of the most disruptive forces in this arena as its certainly gaining traction among the tablet form factor device manufacturers.

“In its current incarnation, the e-reader offers a good reading experience, high levels of portability and great battery life. However, it is under threat from the availability of electronic book (e-book) content on multifunctional devices such as mobile phones, tablet computers, netbooks and other portable consumer electronic devices,” said Gavin Byrne, senior analyst at Informa.

“Apple’s iPad, available in the UK market this week, is perhaps the highest-profile competition for dedicated e-readers. Mobile broadband-capable e-readers will also face competition from much cheaper non-connected models that are targeting a lower retail price in order to stimulate adoption,“ Byrne added.

The analyst believes this threat will deliver a wake up call to e-reader vendors, forcing them to improve both their products and their communications about the benefits of owning a dedicated device.

However, all is not lost. In order to survive, there are a number of approaches that vendors can take. They can develop low cost e-readers with minimal features that can be used in conjunction with a PC or USB dongle to access additional content. For example, e-readers like the Kobo, which retails for $148, may appeal to the cost-conscious user and its price point is further sweetened by the inclusion of 100 classic titles on the device.

Alternatively, vendors can improve feature sets in mid and high-end e-readers to transform them, over time, more into tablet computing devices. These will in effect become more like netbooks/smartbooks than e-readers. Early steps in this direction include Barnes & Noble’s latest software update for the Nook which adds games and a more open web browsing functionality.

Also, many e-reader companies are already looking to develop an electronic reading platform, initially based on their e-reader devices, but that will extend across e-readers, mobile phones, netbooks, note-books and desktop PCs in future iterations.

“There are certainly a number of things that vendors can do to counteract this growing threat. However, the current absence of an obvious subsidy model for mobile network operators , the launch of the iPad and market dynamics are likely to limit the market in the long-term. Overall Informa is sceptical about the sales growth for WWAN-enabled e-readers,” said Byrne.