Attack of the Kindle Killers: The Boom in New E-Readers

Attack of the Kindle Killers: The Boom in New E-Readers

Amazon, the online retailing giant, did more than any other company to turn the sale of digital books into a real business with the 2007 launch of the Kindle electronic reader. The company has sold an estimated 1.7 million of the handheld devices in the U.S., and it’s getting ready to ship millions more. On Oct. 6, Amazon announced it would soon begin selling Kindles — complete with a key feature that allows users to wirelessly download e-books from Amazon — in more than 100 countries.

Success breeds imitators. Amazon is about to be attacked by a squadron of would-be Kindle killers being brought to market by some of the biggest names in consumer electronics and publishing. To complicate the increasingly competitive landscape even further, Apple and, according to rumor, Microsoft are working on tablet computers that could prove to be handy e-readers but with more functions and features, such as video display capability and full web browsers. “2009 is a breakout year for e-readers,” says Sarah Rotman Epps, an analyst with Forrester Research. “But we’re still in the early stages.”

The early stages have lasted a long time. E-readers have been around for more than a decade, but the devices weren’t popular due to high cost, proprietary display formats and the reluctance of book publishers to sell digital versions of their best-selling titles. Now, just as digital music was driven into the mainstream by Apple’s iPod and iTunes, Amazon’s Kindle and online bookstore, which sells more than 350,000 titles, are proving there’s a mass market for e-books. Total industry revenue from digital book downloads has risen 149% this year, according to the Association of American Publishers, while e-reader sales are expected to reach 3 million by Dec. 31, according to Forrester Research. Almost a million of the devices could be sold during the upcoming holiday season alone. In 2010, sales are projected to double to 6 million.

That kind of growth is hard to come by in the recession-wracked technology industry, and a crowd is starting to gather. Around the world, at least 17 e-readers are in development or already on the market. Among the better-known entrants is Asustek — the Taiwanese company, which practically invented the computer netbook category with its ASUS eee-PC, is working on a e-reader called the eee-reader that it hopes to have on the market in time for Christmas. South Korea’s two powerhouse consumer electronics companies, Samsung and LG Electronics, are wading in, too. Samsung introduced a reader called the Papyrus in South Korea earlier this year; reports circulating in the technology blogosphere say LG is developing a prototype with a large, 11.5″ flexible screen. Meanwhile, Japan’s Fujitsu has released the world’s first dedicated e-reader with a color screen, although so far the device is only available in Japan.

It isn’t just tech companies that are joining the fray. Bricks-and-mortar bookseller Barnes & Noble, which in the U.S. already offers access to 750,000 e-books on its web site, is rumored to be pondering the development of its own e-reader to rival the Kindle. Major newspaper and magazine publishers, which are suffering mightily from loss of subscribers and advertisers to recession and the Internet, are also getting involved. News Corp. Chairman and CEO Rupert Murdoch, owner of the Wall Street Journal, is reportedly considering a deal with Japanese consumer electronics giant Sony, which in 2004 introduced the first commercially viable e-reader, to use a black-and-white display technology called electronic ink . Sony is rolling out a new family of e-readers, including a pocket-sized version and one with a large screen geared for newspapers and magazines.

One reason e-readers are getting traction is that competition is driving down prices. Amazon has cut the price of the Kindle by $100 over the past six months to $259. As e-readers proliferate and price disparities narrow, manufacturers are now trying to differentiate their products by adding features such as MP3 players and touch screens. Fremont, Calif.-based Foxit’s eSlick allows users to listen to songs while reading. Asustek recently unveiled a prototype e-reader with two screens, which would more closely duplicate the traditional reading experience, although the device the company expects to release later this year will have a single screen.

At the same time, new display technologies are also emerging that promise to improve battery life and make devices more portable and easier to read. U.K.-based Plastic Logic hopes next year to introduce the first e-reader with a plastic screen that will reduce glare and be less prone to cracking when dropped by ham-fisted owners. Electronic ink technology is set to move from black and white to color by the end of 2010. Even video is on the horizon. “We’ll see a range of models start to appear over the first half of 2010” offering “a range of different reading and productivity experiences,” says Neil Jones, CEO of U.K.-based Interead, which in May launched a $249 e-reader called the COOL-ER.

Newcomers will have a hard time breaking Amazon’s chokehold in the U.S., where the company controls 60% of the e-reader market, according to Forrester Research. But the edge Amazon gained when it launched the Kindle could be blunted by evolving technology and changing consumer needs. Currently more people read e-books on their smartphones than they do on dedicated devices like e-readers.

And there’s the looming threat posed by next-generation tablet computers. Apple, the king of cool handheld devices, is rumored to be readying a tablet computer with all the functions of a laptop as well as iPhone-like touch capabilities for release early next year. Microsoft has been secretive about its plans for a tablet, but a video making the rounds of the blogosphere show a dual-LCD-screen prototype that closes like a book. “E-readers are a transitional technology,” says Rotman Epps of Forrester Research. Which means that just when the e-reader is taking off, it may be becoming obsolete.

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