December 12, 2012

The Tablet Killed the EBook


A new IHS iSuppli Consumer Electronics special report from information and analytics provider HIS points to what is perhaps something enormously obvious - or at least what should be enormously obvious. The dedicated standalone eBook reader - first made famous by the original Amazon Kindles, is on the path of the dinosaur and dodo bird - heading rapidly for extinction. More or less.

After spectacular growth during the last few years, the eBook reader market, per iSuppli, is now on a definitely steep decline caused entirely by consumer adoption of tablets. Far cheaper than tablets (even considering the low end of the tablet market), and typically having a battery life of perhaps as long as three weeks, eBooks first came on the scene in 2006 and were slowly adopted as the eBook content market developed, and then ramped up in sales between 2008 to 2010, when shipments grew from one  million to 10.1 million units. The market peaked in 2011 with 23.2 million units.

But, it looks like the fun and games are over. Shipments of eBook readers for 2012 will fall to 14.9 million total units, down a whopping 36 percent from 2011. And iSuppli expects another major 27 percent contraction will occur in 2013, with eBook shipments declining to 10.9 million units, just a bit over 2010 sales. By 2016, iSuppli expects eBook sales to come in at no more than 7.1 million units. That is more than a 66 percent drop from the peak 2011 volume of 23.2 million.

“The rapid growth and the immediate collapse of the eBook market as we've forecast it is virtually unheard of, even in the volatile consumer electronics space, where products have notoriously short life cycles,” says Jordan Selburn, senior principal analyst for Consumer Platforms at IHS. “The stunning rise and anticipated 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' by full featured tablets."

Selburn adds, "While other single tasking devices such as 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 eBooks, which demonstrates even more painfully the depth of the eBook free fall.”

Is there a possible salvation anywhere? Likely not, although not all geographic areas are affected the same way. For example, the market for eBooks remains strong in Eastern Europe and Russia. And there is also potential opportunity in regions such as Africa and India, where both the low cost and power efficiency of eBooks bring to the game (those three weeks without needing a charge) will make them more attractive, given ongoing power issues in those regions. Meanwhile, if prices drop further that will prolong eBook sales in these highly price-sensitive regions as well.

The Unassailable Tablet

Compared to eBooks, the tablet market is going through an essentially unstoppable growth phase, with thanks of course going to the Apple iPad. Tablet shipments will hit 120 million units in 2012 after two short years of the device being on the market, and iSuppli anticipates sales of 340 million units by 2016 a magnitude of sales that is exceeded only by mobile handsets.

Device teardowns made by the IHS iSuppli Teardown Service of a wide range of eBooks and tablets easily confirms that eBooks are much less expensive to build. For instance, 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 Asus is almost twice as high at $153. And street prices reflect this.

However, the huge advantage tablets have in overall versatility far outweighs the cost advantages of eBooks as far as consumers are concerned.




Edited by Jamie Epstein



Related Tags

Apple    Tablet   
       

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