Worldwide sales of connected E-readers on track to reach 6.6 million units in 2010

STAMFORD, USA: Worldwide connected e-reader sales to end users are forecast to total 6.6 million units in 2010, up 79.8 percent from 2009 sales of 3.6 million units, according to Gartner Inc. In 2011, worldwide e-reader sales are projected to surpass 11 million units, a 68.3 percent increase from 2010.

The market for e-reading devices — portable devices that use an E Ink, e-paper or similar display technology — has become crowded and is at risk of commoditization due to developments in adjacent markets, such as those for media tablets, according to Gartner analysts.

"The connected e-reader market has grown dramatically during the past two years, driven by sales of Amazon's e-readers, primarily in North America. This is the dominant region for e-reader sales, and we predict that it will account for sales of just over 4 million units in 2010," said Hugues De La Vergne, principal research analyst at Gartner.

North America will remain a key market through 2014, although its dominance will decline significantly as regions such as Western Europe and Asia/Pacific become the leading locations for growth. Growth in North American and other markets will remain constrained by the success of media tablets, such as the Apple iPad."

Although three vendors dominate today's e-reader market (Amazon, Barnes & Noble and Sony), new competitors may well appear in the future with low-cost devices subsidized by content owners. Large consumer electronics and PC firms such as HP and Dell are also trying to position themselves strongly in the market for connected consumer devices.

E-readers have carved out a solid niche in the consumer electronics market due to their portability, long battery life, solid display technology (although most lack color screens) and relatively inexpensive retail prices.

Cannibalization by media tablets represents the biggest threat to e-readers. Media tablets can offer a compelling experience for electronic magazines and newspapers, due to their widespread adoption of displays that show color and support full-motion video. By incorporating e-reader functionality, media tablets can perform many different functions, including supporting e-reader applications.

"With media tablets offering more functionality, e-reader vendors need to target avid readers who may see the value of a stand-alone device that performs particularly well," said Allen Weiner, research vice president at Gartner.

"E-reader vendors will also need to offer lower prices than for more fully featured media tablets. This will entail smaller profit margins and potential hardware subsidies at retail, and/or the ability to obtain lower-priced components. We think few end users will buy both an e-reader and a media tablet, so it is important that e-readers retain a price advantage."