December 13, 2012
E-Reader Sales Drop As Tablet Sales Rise
Enid Burns for redOrbit.com — Your Universe Online
E-book readers had a good run, but an IHS iSuppli Consumer Electronics Special Report finds that the platform is threatened by more nimble tablet devices that can store books, but also run apps, video, show photos and a whole lot more.
The start of the e-book reader run began around 2006 and from there, shipments continued to climb in volume. From 2008 to 2010, shipments increased from 1 million to 10.1 million, which IHS iSuppli says is up by a factor of 10. In 2011 the market peaked with shipments totaling 23.2 million units.
By the end of the year, however, IHS iSuppli believes that shipments of e-book readers will fall to 14.9 million units, down 36 percent from 2011. Next year the research firm forecasts a 27 percent drop to where e-book reader shipments will sit at 10.9 million units. By 2016, the e-book reader market will amount to 7.1 million units.
"The rapid growth - followed by the immediate collapse - of the ebook reader market is virtually unheard of, even in the volatile consumer electronics space, where products have notoriously short life cycles," said Jordan Selburn, senior principal analyst for consumer platforms at IHS iSuppli, in a statement. "The stunning rise and then blazing flameout of ebooks perfectly encapsulates what has become an axiomatic truth in the industry: Single-task devices like the ebook reader are being replaced without remorse in the lives of consumers by their multifunctional equivalents, in this case by media tablets. And while other uni-tasking devices - like digital still cameras, GPS systems and MP3 players - also face similar pressures and battle dim prospects ahead, all have had a longer time in the sun than ebook readers, demonstrating even more painfully the depth of the ebook reader's fall.”
There might still be life for e-book readers in other parts of the world. The report finds that a market remains in Eastern Europe and Russia. It is possible that a potential market also exists in developing regions such as Africa and India, "where the power efficiency of ebook readers may make them more attractive, given ongoing power issues in those regions," the report states.
One element that could save e-book readers and keep sales up is further price drops. This holiday season there are e-book readers in Best Buy for as low as $65, with some even less expensive e-book readers on the market.
Tablets are seeing "unstoppable growth," the report says. This is mostly due to the Apple iPad, which was launched in 2010. Android tablets have also enjoyed some brisk sales and that will help tablet shipments reach 120 million units in 2012, and 340 million systems are expected by 2016. The report says the volume of sales has only been exceeded by mobile handsets.
Media tablets are versatile, which helps make the sale. Tablets do double duty as an e-reader for books and other media, but also play movies, runs apps and browse the web. IHS iSuppli has determined that e-books are much less expensive to build, compared to media tablets. The seven-inch Amazon Kindle reader released in late 2011 has a total bill of materials cost of $84, while the recently released Nexus 7 tablet from Google and manufactured by Asus has a total bill of $153 for all of its parts.
To keep the e-book reader alive, manufacturers may sell the hardware at or below cost. The subsidy to purchase an e-book reader can be made back by the sale of media.
Manufacturers who shift emphasis from e-book readers to media tablets will do well, strategically.
"The decline of the e-book reader market will translate into benefits for media tablet suppliers along their supply chains," the report says. "The market for tablet displays, for instance, is expected to double from 2011 to 2014, reaching almost $10 billion."
Semiconductor shipments for tablets will see similar growth. Total semiconductor consumption by tablets will top $20 billion by 2016, "more than twice the amount in 2011 - making the area one of the most lucrative opportunities for the overall chip industry," the report says.