Last chapter for e-readers?
Analysts are sounding a proverbial death knell for e-readers, which have declined 36 percent in 2012 as buyers turned instead to multi-use tablets.
Both IHS Suppli and IDC recently issued dire warnings, if not obituaries, for e-readers. IHS said Monday that e-readers will see a 36 percent drop in shipments to retailers in 2012 over last year, and another 27 percent contraction in 2013.
Last week, IDC said 2012 shipments will decline by 28 percent over 2011. The impact of multi-use tablets with a "good enough" reading experience has meant that IDC expects e-readers to reach just 19.9 million units shipped in 2012, down from 27.7 in 2011.
E-reader popularity has plummeted as consumers switch to multi-use tablets, which have e-reading capabilities as well as other features.
IHS forecast the more serious 36 percent drop of the two analyst firms and characterized the decline more dramatically. "The ebook reader market is on an alarmingly precipitous decline, sent reeling by more nimble tablet devices," wrote IHS analyst Jordan Selburn.
Selburn said that 2011 appears to have been the peak of the e-reader market, when IHS said that 23.2 million e-readers shipped, compared to 14.9 million shipped for all of 2012. By 2016, Selburn said that just 7.1million e-readers will ship, equal to a loss of more than 66 percent since 2011.
The decline is occurring even as front-lit e-readers from Amazon and Barnes & Noble have hit the market in 2012, offering a higher quality reading experience sought by a subset of consumers who prefer a dedicated e-reader, the analysts noted.
Amazon sells the 6-in. Kindle Paperwhite for as little as $119, depending on the version. The Paperwhite was announced in September and Amazon has been heavily promoting it with national TV ads in recent weeks. It has been described as Amazon's answer to the 6-in. Barnes & Noble Nook Simple Touch with GlowLight, which also sells for $119.
But such e-readers are proving no match for multi-use tablets, both analysts noted. Tablets are enjoying unstoppable growth, mostly thanks to the Apple iPad, which made its appearance in 2010, Selburn said.
The traditional 9.7-in. iPad starts at $499, although Apple recently introduced the 7.9-in. iPad mini, starting at $329. Both Amazon and Barnes & Noble also make multi-use tablets with prices starting at under $200.
IHS said 120 million tablets will ship in 2012, while IDC put the number at 122.3 million. By 2016, IHS predicts 340 million tablets will ship, while IDC predicts 282.7 million.
Multi-use tablets can work as e-readers of email and e-books but have the added value of Web surfing and play movies, while e-readers are single-task devices that cost less.
"The stunning rise and then blazing flameout of e-readers perfectly encapsulate what has become an axiomatic truth in the industry: Single task devices like the e-reader are being replaced without remorse in the lives of consumers by their multifunction equivalents, in this case by media tablets," Selburn said.
Other single-task devices. such as digital still cameras, GPS systems and MP3 players face similar market pressures and dim prospects, but have had more years on the market than e-readers, "demonstrating even more painfully the depth of the e-book readers' fall," Selburn added.
Ryan Reith, an analyst at IDC, added that "people would love to have a smartphone, e-reader, tablet and laptop, but in reality we need to realize that consumers can't generally afford to buy all of these devices." Still, e-readers are cheap and serve a specific purpose, "so will certainly be around for a long time, but growth will be very limited."
Not all is lost, however. Selburn said Amazon is insulated from declining interest in e-readers because of its huge sales of e-books.
Another analyst, Jack Gold of J. Gold Associates, agreed. "While the market for dedicated e-readers is shrinking, the market for dedicated consumption devices tied to particular delivery channels like Amazon with Kindle will remain healthy, albeit smaller than for the overall tablet market," Gold said.
There will still be e-reader buyers interested in spending less than for tablets, which will keep e-readers a "a small but important" market, Gold added. "Not everyone is willing to spend $500 to $600 for a full-featured tablet."
Selburn also said e-reader manufacturers will face more pressure to keep costs low and to sell the devices at even lower prices. There is industry speculatlion that the 5-in. Txtr Beagle reader will sell for just $13 in 2013, when subsidized by wireless carriers, he said.
Such extremely low pricing may help prolong the life of the e-reader market, but Selburn lamented that e-readers will never regain the popularity they once had -- all the way back in 2011.