New Apple and Android tablets are literally killing the once-thriving eBook business, thanks in part to their multi-purpose functionality that includes gaming.
European reprieve?
Despite their challenges, the market for ebook readers remains strong in Eastern Europe, and Russia. There also exists a potential opportunity in 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. Sales prospects for ebook readers also could improve if prices drop further.
Tablets on the rise
In contrast to the ebook readers, tablets are enjoying unstoppable growth, mostly thanks to the Apple iPad, which made its appearance in 2010. Tablet shipments will hit 120 million units in 2012 only after two short years of the device being on the market, and 340 million systems are expected by 2016—a magnitude of sales exceeded only by mobile handsets.
The versatility of the media tablet—able to serve as a reader of emails as well as books, while capable of surfing the Web and playing movies—has even overcome the cost advantages of the ebook reader. Dissections made by the IHS iSuppli Teardown Service of a wide range of ebook readers and tablets alike confirm that ebooks are much less expensive to build. For instance, the 7-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.
Dime novels
To try to maintain their market, ebook readers are likely to continue to sell at manufacturing cost or even less in the future. Industry rumors speculate the Txtr Beagle reader, an ultra-low-cost model with a 5-inch screen, potentially selling for as little as $13 alongside operator subsidies in 2013—less than the cost of the display alone. Such extremely low pricing may serve to prolong the life of the ebook reader market for a little while, IHS iSuppli believes, but the devices on the whole will not regain the popularity they once had.
