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Eight reasons e-readers could fail

By Matt Hamblen, Computerworld
November 19, 2009 12:41 PM ET

Computerworld - The Nook e-reader will debut on November 30 at Barnes & Noble Inc. stores, joining several new electronic reading devices hitting the market soon.

iRex Technologies recently launched the iRex DR800SG, adding to recently announced Amazon Kindle devices and newer Sony Readers. Plastic Logic Ltd. will unveil the QUE in early January with a focus on business professionals. And, Spring Design Inc. has announced the Alex.

With this profusion of dedicated e-reader devices, analysis firm iSuppli Corp. predicts that 13 million e-readers will be sold next year, up from about 5 million in 2009.

Some projections for 2010 are less than half that of iSuppli's, however. Analysis firm MediaIdeas projects that only 5 million devices will be sold, despite the 40 different dedicated devices that will be available.

But some analysts says it is simply too early into the development of e-readers to know what could happen with sales. Gartner Inc.'s Allen Weiner said smartphones or tablet computers could become an effective alternative to e-readers, with Apple Inc. possibly stealing all the attention with a tablet-sized device that functions as an e-reader.

"The market for single-purpose e-readers might never take," Weiner told Computerworld. "We really have no idea whether people will decide to read books on smartphones [instead of e-readers] and no idea what Apple will do."

But he said that, despite rumors of a tablet-type Apple device early in 2010, "There's still a good chance Apple will do nothing."

Weiner believes Apple is planning something that can rival e-readers, since Apple is talking to book publishers, but that is not any guarantee of a product in early 2010.

"Either the e-reader is going to take off like a rocket, or go into the technology Hall of Fame," Weiner said. "There is a thirst and a market for e-books and a thirst and market for dedicated e-book readers, but it is not clear how large yet."

Various analysts have named at least eight potential obstacles to the wide adoption of e-readers, even though it is obvious that large companies like Amazon, Google Inc., Barnes & Noble and others have invested millions of dollars in researching technology for displaying digital text clearly through e-ink technology, and probably have conducted extensive market research as well.

All the major U.S. telecom carriers are also involved, offering wireless connections to users who download e-books with the wireless cost included in the price of the book. Sprint Nextel Inc. was the first, working with Kindle devices.

Despite those investments, here are the eight main concerns about the future of e-readers:

1. Price of devices

The lowest prices for e-readers are hovering at $200 for the coming holiday season, but Weiner and others see the $100 price tag as the magic number that is needed to attract a significant number of buyers by Christmas in 2010.

The Nook sells for $259 (currently on pre-order) and is being marketed as a direct competitor with the Kindle 2. Meanwhile, the Sony E-reader sells for $200, with some offers including a $30 gift certificate to buyers, to be used for purchases at a computer store.

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