The much-touted iPad was launched amid great fanfare in the US on Saturday, prompting analysts to question whether Apple Inc’s tablet device will put a brake on growth in e-reader sales.
“Although e-readers offer features not found on iPad or tablet devices, we expect their single functionality and lack of quality color displays will result in significant pricing pressure from the iPad, which retails as low as US$499,” Dale Gai (蓋欣山), an equity research analyst at Yuanta Securities Co (元大證券), said in a report last Tuesday.
To drive demand, 9-inch monochrome e-readers should be priced below US$199 in the US and US$99 in China. In these scenarios, margin pressure will hit the supply chain, Gai said.
While global shipments of 10 million e-readers this year — up from 4 million last year — is achievable, industry downside risks are expected over the next two years unless significant technological breakthroughs lower average selling prices and offer better color solutions, the report said.
Topology Research Institute (拓璞產業研究所) said last week that if the iPad craze maintains its momentum, total sales could reach 5 million units in the first three months.
Taking into account other tablet devices such as tablet PCs, combined shipments are expected to hit 12 million this year, beating e-readers in terms of sales, the Taipei-based research firm said.
Yuanta said electrophoretic displays (EPD) account for between 25 percent and 30 percent of e-readers’ total material costs, with prices controlled by E-Ink Corp, a subsidiary of e-paper display maker Prime View International Co (元太科技).
Projective capacitive-type touch panels also account for 25 percent of ipad's total material costs, but a 25 percent to 30 percent year-on-year price drop will result a deeper cost-curve than E-Ink’s EPD from next year onwards, it said.
“E-readers face serious questions — either offer a deep price cut at the expense of margin, or stay in the niche sector with less growth potential beyond next year,” Gai wrote.
Although the market will see enriched e-reader devices, with such technologies as flexible substrates and touch panels, the mainstream 9-inch monochrome e-readers could offer less novelty this year, while mass production of color e-readers is still in its infancy, he said.
Therefore, E-Ink’s dominant share is expected to face intensifying competition from the second half of next year, Gai said.
While E-Ink should retain between 80 percent and 90 percent of the e-reader market this year, it faces rising rivalry from low-cost suppliers like Sipix Technology Inc (達意科技) and emerging technologies like Mirasol and AMOLED, which will replace TFT-LCD in handsets and pose a long-term threat to pure e-reader devices, he said.
However, Prime View chairman Scott Liu (劉思誠) said in February he believed the iPad would not jeopardize e-reader sales, as the iPad’s TFT display is less suitable for text reading and shortcomings, such as shorter battery life and extra costs for 3G wireless Internet connection, would mute enthusiasm.
Also See: IPad’s popularity signals tablet revival
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