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TECHNOLOGY Updated January 4, 2013, 1:25 a.m. ET
The E-Reader Revolution: Over Just as It Has Begun?
By GREG BENSINGER
The e-reader era just arrived, but now it may be ending.
Dedicated devices for reading e-books have been a hot category for the past half-dozen years, but the shrinking sizes and falling prices of full-featured tablet computers are raising questions about the fate of reading-only gadgets like Amazon.com Inc.'s original Kindle and Barnes & Noble Inc.'s first Nooks.
Market-researcher IDC recently estimated 2012 global e-reader shipments at 19.9 million units, down 28% from 27.7 million units in 2011. By contrast, IDC's 2012 tablet forecast is 122.3 million units.
IHS iSuppli comes up with different totals, but it sees a similar trend. It estimates that shipments of dedicated e-readers peaked in 2011 and predicts that 2012 shipments slid to 14.9 million units, down 36% from a year earlier. By 2015, it expects unit sales of dedicated e-readers to be just 7.8 million.
One problem is that some users who bought e-readers see no particular urgency to buy another. Julie Curtis, a substance-abuse counselor in Stow, Ohio, says she is devoted to her two-year-old Kindle. "It works fine, I really have no reason to get a new one," she says. "If I did ever want to upgrade, it would probably be to a tablet, like the Kindle Fire," she adds.
E-readers seemed revolutionary when they came into vogue in 2007. They allowed users to store and read hundreds of books on a device that was lighter than many hardcovers and took up much less space. In addition, digital books cost less to buy.
In the intervening years, e-reader designs improved. The devices looked sleeker, they were easier to read, they weighed less, their pages turned faster, and they held more books. Wireless capability allowed users to download novels, magazines and newspapers wherever they were, whenever they wanted, and now the devices allow for reading in the dark.
"The real innovation in e-readers has been giving consumers a convenient way to buy books, wirelessly, without even having to use their computers," says Sarah Rotman Epps, a Forrester Research analyst. "Giving consumers a digital storefront right in their hands, that's what really made e-readers a phenomenon."
But tastes and technology have moved on. People haven't stopped reading. They are just increasingly likely to read e-books on tablets rather than e-readers, according to a recent Pew Research Center report. The polling firm found that 23% of Americans said they had read e-books in 2012, compared with 16% in 2011.
And ever cheaper tablet computers can be used not just as sophisticated readers but also as Web browsers, game consoles and cameras. "For most consumers, a multi-use tablet is a better fit, particularly at the price points at which tablets can now be had," says Tom Mainelli, IDC's tablet research director. "E-readers will eventually become a niche product."
The trend away from dedicated e-readers stems, in part, from their more-limited capabilities, which often include monochrome screens and rudimentary Web surfing. Tablet computers, such as Apple Inc.'s iPad, Amazon's Kindle Fire and other devices using Google Inc.'s Android operating system, have color displays, full Web browsing.
The price gap for many tablets has also narrowed, making them even more attractive to consumers. Google, for instance, sells a version of its Nexus 7 tablet for just $199, and Amazon now offers a $159 model of its Fire device, which is $20 less than the most expensive Kindle e-reader and $40 more than the priciest Nook. And the arrival of the iPad Mini recently brought the entry price of Apple tablets to $329, down from $499 at the original iPad size.
Not that all tablets are being embraced by consumers. Some data have shown a slow start to such devices powered by Microsoft Corp.'s new Windows 8 software.
Sales of Windows notebooks and tablets fell 13% in the Oct. 21 to Dec. 8 time period, compared with the same stretch in 2011, according to NPD Group. The market-research firm says the Windows 8 tablet sales it measured were immaterial. (It hasn't tracked sales of Microsoft's new Surface tablet.)
On Thursday, Barnes & Noble said that revenue at its Nook segment—which includes both tablets and e-readers, as well as digital content and accessories—fell 13% from a year earlier to $311 million for the nine-week holiday period ended Dec. 29. The company doesn't detail sales for specific devices.
A Barnes & Noble spokeswoman didn't immediately respond to a request for comment. An Amazon spokeswoman declined to comment.
Despite the trends, dedicated e-readers have some selling points. They tend to be lighter than most tablets, and a different style of display improves their battery life. Barnes & Noble says the low-end Simple Touch version of its Nook line can operate up to two months on a battery charge, compared with around 10 hours of reading on its Nook HD tablet.
There have also been major improvements in e-readers, including touch-screen technology and self-lighting screens. "E-readers are dramatically better today than they were even two years ago," says Avi Greengart, an analyst at Current Analysis.
Moreover, e-reader prices have fallen sharply, with Kindles starting as low as $69 for a model that comes with ads.
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