Ebook Readers At The Crossroads

In an article published right before Christmas, the Times points out that a widely-anticipated ebook price war never happened, and that most ebooks continue to sell at slight discounts to hardcover versions. One reason for this “non-event” is that the prices of dedicated e-readers and tablets have dropped so low that it’s impossible to make any money from them.

Amazon’s Kindle can now be purchased for as little as $69, while Barnes & Noble’s cheapest Nook is tagged at $79. The Nook Glowlight is available for about $129, while full-color Nook tablets are in the $269 to $299 price range.

And there’s the rub: Tablets are in; dedicated e-readers are on the decline. Research firm IHS stated that dedicated eBook readers “…will go the way of the dinosaur…sent reeling by more nimble tablet devices that have gained the ardent patronage of consumers.” IHS’s most recent research predicted that ebook reader sales, which peaked at 23 million units in 2011, will have fallen to 14.9 million units by the end of 2012 when the final numbers are tallied.

And the future doesn’t look too rosy, either. The IHS report forecast ebook reader sales falling to 7 million units annually by 2016, which would represent a decline of 66% from the 2011 numbers. To quote from IHS, “The stunning rise and then blazing flameout of ebooks perfectly encapsulate what has become an axiomatic truth in the industry: Single-task devices like the ebook are being replaced without remorse in the lives of consumers by their multifunction equivalents, in this case by media tablets.”

How about the declining sales of ebook titles? Tablets are more than adequate replacements for readers, so that can’t be the problem. No, according to the Times article, it’s the continued shuttering of retail bookstores that is the problem – and many of those stores are leased and operated by Barnes & Noble.

Michael Norris, a Samba Information analyst who follows the publishing industry, was quoted in the Times article as saying, “We have found that at any given time about a third of e-book users haven’t bought a single title in the last 12 months. I have a feeling it is the digital equivalent of the ‘overloaded night stand’ effect; someone isn’t going to buy any more books until they make a dent in reading the ones they have already acquired.”

According to Norris; the 2011 demise of Borders, the second-biggest chain of bookstores, actually hurt the e-book industry. Prospective customers were using Borders to “showroom” various titles, and then would go home and order them online from Amazon.

In his blog, Melville House publisher Dennis Johnson points out that Barnes & Noble has been closing stores left and right since Thanksgiving; many of which are located in or near major cities. He goes on to state that as many as 1362 bookstores of all kinds have closed their doors for good, less than two years after Borders went into bankruptcy.

According to statistics compiled by Publisher’s Weekly, Barnes & Noble store sales declined 11% year-to-year, while sales of Nook devices (presumably including the new tablets) were off by 12.6% from 2011. Morningstar analyst Peter Wahlstrom was quoted in the blog post as saying, “…you’d have expected that Barnes & Noble would have been able to maintain its share because it introduced two new color tablets during the quarter. They aren’t behind on the tablet front in the sense that their devices compare well with others, but they are behind in terms of marketing, awareness and adoption. And that’s critical.”

The ascent of tablets over ebook readers shouldn’t come as a surprise. Tablets can do so many more things, and as I showed in a post last December, really function more like ultrabooks on steroids (which is why ultrabooks have become extinct). So they aren’t just devices for reading newspapers and books, looking at photos, watching movies, or listening to music.

No, the Nook and Kindle products are actually portals into retail commerce for B&N and Amazon. Jordan Selburn of HIS made that point succinctly in the Times article: “Amazon does not make much off the hardware,” he said. “Its goal is to sell you content. When they sell you a Kindle Fire tablet, they are not just selling you books but movies, diapers, and garden hose. It’s a portal into their entire store.”

At ISE 2013 next week, I will be showing a concept demo of a wireless Nook HD+ playing back videos and PowerPoint slides, using AMIMON’s WHDI technology to make a wireless HDMI connection to the room projector. Although the demo requires a kit-bashed Nook hardcover, a large iGo battery, and WHDI stick; the whole thing works remarkably well.

And yes, I’ll be using that same Nook HD+ to read a few books and watch some movies on the flights to and from Europe…something my Glowlight ebook reader just can’t do. Maybe it will be a museum piece in another year or two?

This article originally appeared in Display Daily.