Let’s talk about dedicated reading devices with large screens. There aren’t any except the Kindle DX.
Let’s see what we have –
- Kindle DX and Kindle DX 2.
- Nothing from B&N.
- Nothing from Sony. The 7″ screen Daily Edition doesn’t qualify.
- A dual screen Tablet from Entourage Edge that is more Tablet than eReader.
- Nothing else from any big company.
We’re not counting the iPad as it’s not a dedicated eReader.
Large screen eReaders we would have had which either got delayed or got cancelled –
- Skiff was going to release a very large screen dedicated reading device but it’s either cancelled or postponed.
- Plastic Logic has delayed the Que ProReader.
- Fujitsu’s large screen color eReader hasn’t been released outside Japan.
- The Pixel Qi magic screen powered dual-mode Tablets aren’t out yet – Actually, Notion Ink’s Adam has been delayed.
- There have been a bunch of companies showing off large ePaper screens but none of them have made it into any actual eReaders.
All of this brings us to an interesting question.
Why are there no Kindle DX competitors?
Let’s explore the possibilities –
- Perhaps the Kindle DX is hard to compete against. Well, that’s a little hard to believe. The Kindle DX 2 doesn’t have any killer features other than the eInk Pearl screen and at $379 there’s lots of room. It’s not like the $139 Kindle WiFi where the smaller companies just can’t compete.
- Perhaps the larger 9.7″ screen is very expensive. There’s a slight possibility that this is indeed the case. It would mean that any company competing against the Kindle DX would have to come in around the same price and beat the Kindle DX on other areas. Not a very easy thing to do.
- There isn’t enough supply of the 9.7″ screens. There might be some truth to this.
- The market for large screen eReaders isn’t very big. Perhaps a lot of companies feel large screen eReaders start competing with tablets and become too expensive and that the market for a $400, large screen, dedicated reading device is very small. This is quite possible.
- The risk is too high. It could be that the amount of investment required to create and release a large screen eReader is very high. There are larger costs for everything – screen, components, shipping, storage. Combine this high cost with a competitor like Amazon and the possibility that the market size is rather small and it becomes too risky to release a large screen eReader.
The 4th and 5th points are probably the big ones. Let’s dive deeper into these.
Is there a market for a large screen eReader?
First, let’s consider what a large screen reading device would be used for – reading and browsing websites, reading newspapers, reading magazines, textbooks, perhaps comics and graphic novels.
In each case eInk makes the reading great and everything else terrible. The slow refresh speed of eInk, the lack of color, and the lack of evolution in general means that LCD screen devices are much better suited for the non black and white text components of these pursuits.
Please Note: We’re assuming that the 6″ eReaders have large enough screens for reading books.
It’s quite remarkable that eInk seems almost perfectly suited for only one activity – reading books.
Let’s say the market for people who want a device to read online articles, magazines, textbooks, and comics and who are willing to pay $400 to $500 is 20 million people a year. A large screen dedicated eReader would be competing against tablets of all sorts, netbooks, rival ePaper technologies, and smaller screen eReaders. There doesn’t really seem to be a big, huge market for a large screen dedicated reading device.
If eReaders get adopted in education because they are less distracting than multi-purpose devices then we have a huge market – However, that’s not very likely. The most likely outcome is that we’re looking at a 5 million devices a year market as long as the price is around $400.
What’s the risk to reward ratio for bringing a large screen eReader to market?
We have a market of around 5 million units a year. Let’s see all the risk involved –
- You have to put in a lot of investment to come up with a large screen eReader (same as for any new product).
- You have to negotiate screen supply with eInk and components from other vendors. There are probably contracts and minimum purchase agreements involved.
- If you don’t get the #1 spot your sales are 2 million units a year or less.
- You’re aware that Tablets are going to get cheaper and cheaper so you must have a plan to cut prices yourself.
- Amazon might decide to start taking a loss.
- Since you’re marketing the device to demographics that either don’t have money (students) or have lots of options (sources for textbooks and newspapers, piracy) you might not have a long-term revenue stream.
- The risk of accidents and failures is much higher – The yield for large screens is usually a lot less than for smaller screens, larger eReaders will be tougher to store and ship, and the cost to users if they break an eReader is much higher for large screen eReaders.
The last point brings up something interesting – Not only are the risks high for manufacturers the risks are higher for customers too. This risk adds to the high price and further narrows the market.
The reward just isn’t there
Let’s assume a company risks all of this and becomes a success and is selling 3 million large screen eReaders a year. It’s selling them for $400 and after everything is said and done it’s making $50 profit per eReader. That’s $150 million in profit a year. We’ve already talked about there not being another revenue stream (since there is so much competition and so much piracy). So $150 million profit a year is all we have.
This might seem like a lot. However, contrast this against the investment required and the risks.
Perhaps $50 million in investment to get everything set up and bring the large screen eReader to market. All the risk factors we’ve discussed above. The big giants i.e. Apple and Amazon, will definitely attack your market share. Companies will try to take over your device and probably kill any possibility of creating a second revenue stream from sales of books and newspapers.
Investing $50 million, figuring out all the agreements and nuances, and fighting this grand war with Apple and Amazon in return for a 10% chance of a $150 million a year profit stream isn’t very enticing. It’s even less enticing when you realize that even if you get to the $150 million a year profit stream Amazon will take a loss to cut into it and Apple will keep trying to steal away the most profitable part of your customer base.