Why ereaders are crumbling

So sales of tablets will soon overtake those of PCs, according to the new figures from IDC. But one mobile device that isn’t surging is the ereader.

Sales of ereaders, such as Amazon’s Kindle and Barnes & Noble’s Nook, seemed to have peaked – with sales currently declining faster than even those of PCs. Only 16m ereaders will be sold this year, Gartner estimates, down from 24m in 2011 and 18m in 2012. Gartner cut its forecasts for future shipments by nearly half earlier this year.

Ereaders face two big problems.

1) They lack functionality. The Kindle, Kobo and Nook may be great for reading texts, but they cannot offer the graphics needed for magazines, let alone the browsing or apps offered by tablets. Consumers looking to buy one device may therefore choose a small tablet such as the iPad mini.

2) They last for a long time. An owner of an ereader doesn’t need to update her device every year like an iPhone user might.

What’s the impact of the ereader’s decline?

This might not capsize the major ereader manufacturers – Amazon, Barnes & Noble and Kobo, which have all been moving into the tablet market.

But a bigger question is whether sales of content – i.e. ebooks – can continue, despite slower growth in ereaders. Some observers point to figures showing ebook sales growing at a slower rate. Others say that tablet users will continue to buy ebooks, even though reading on a LCD screen can be less pleasant. And because of the durability of the devices, it’s likely that the number of ereader owners is slowly increasing, even while ereader sales are slumping.

Yet one company that is in trouble is E Ink, the Boston-based, Taiwanese-owned maker whose electronic paper is used in over 90 per cent of ereaders. Its financial performance has worsened since 2012, culminating in a $33m operating loss in the second quarter of this year, its worst result for four years.

E Ink has ideas for its own salvation. Smartwatches and other wearables could use its ink. Sony is trialling PDF readers, using E Ink’s technology, at Japanese universities. Known as “virtual printers”, such PDF readers could be one route to the paperless office.

But it’s not clear how profitable they would be for their backers, because there would be no tied-in content (companies would upload their own PDFs to the device).

That’s why most energy will keep being diverted into tablets.