Challenges and choices facing e-book readers
By Zhu Shenshen |
July 23, 2010, Friday
|
Print Edition
Print Edition
WANG Lei had been planning to purchase an e-book reader for a long time, but now the 24-year-old local teacher has a new choice to consider - buying an iPad from Hong Kong, which will be available from this weekend.
"It's irresistible for me to have a cool device with more functions," said Wang of the more expensive iPad. "But price is an issue."
Wang is one of many consumers caught in a rapidly changing Chinese market, where the e-book sector is starting to cool and faces restructuring, new technology is developing, the iPad is growing in popularity and fierce competition is pressuring prices.
The confluence of all these factors has halved the share price of market leader Hanwang Technology from a 52-week high in just two months. Also affected are smaller Taiwan manufacturers and domestic shanzhai companies, or copycat product makers with no brand and low quality.
"It's time for the market to change and diversify," said Fang Li, an analyst at Beijing-based research firm Analysys International. "Every player faces both opportunity and challenge now."
An e-book (short for electronic book) is a digital media equivalent of a conventional printed book. The device displays e-books with e-ink (electronic ink) technology. It may be a device specifically designed for that purpose, such as Amazon's Kindle and Hanwang's products, or with multiple functions, like Apple's iPad.
In 2009, China's e-book market took off and the sales hit 400,000 units from almost zero in the previous year, according to Zero2IPO, a Beijing-based research firm.
In the second quarter, China's e-book sales slipped to 231,200 units from 249,100 units in the first three months of the year, the first quarterly decline, according to Zero2IPO.
"The debut of replaceable devices like iPad and the rapid development of more sophisticated e-book screens have made firms take a more cautious approach," said Zhang Yanan, a Zero2IPO analyst.
In the international market, major e-ink e-book vendors like Kindle and Barnes & Noble have come out with all guns blazing in the war against iPad.
In June, the Kindle reader producer slashed the price for hand-held devices in the US from US$259 to US$189, a 27 percent drop. Barnes & Noble reduced the price of its Nook reader 23 percent to US$199 on 3G and Wi-Fi models. It also launched a new entry-level Wi-Fi only model at US$149, a third of the entry-level price iPad charges for 16G and Wi-Fi units.
In April, Apple launched the iPad tablet PC in the United States, which introduced the iBook function to compete with the likes of Kindle. Apple sold more than 3 million units within the first three months, and the device is scheduled to debut in Hong Kong.
Compared with LCD-screen devices like iPad, e-ink readers have the advantage of greater portability, better readability in bright sunlight and a long battery life. They create a "paper-like" effect while reading.
Recent technology upgrades at E Ink Holding Inc, the world's biggest supplier for e-ink screens, intensified price competition and enhanced their attraction.
Taiwan-based E Ink launched the next-generation electronic paper display technology, called Pearl, this month. It features a 50 percent higher black-and-white contrast ratio, making texts and pictures sharper.
The more advanced technology has forced vendors to cut prices to clear stockpiles of older products.
Taiwan-based Teclast Electronics Co, the No. 2 e-book reader vendor in the domestic market, has adopted aggressive strategies to grab market share from leader Hanwang. It slashed the price of entry-level product K3, from 1,499 yuan (US$221) to 999 yuan, probably the first branded e-book reader to sell below 1,000 yuan in China.
The average price of a China's e-book reader will drop to below 2,000 yuan in 2010 from 2,500 yuan last year, predicted a report from Galaxy Securities.
The share price of Shenzhen-listed Hanwang, the only listed e-book reader firm on the Chinese mainland, dropped more than 60 percent from its peak price to 104 yuan on Wednesday, after slumping to as low as 89 yuan last week. Analysts have expressed concern about its stockpiles and mounting competition from replaceable devices like iPad and some smartphones.
Hanwang, which has enjoyed 70 percent of the China market, kicked off new, cheaper products F30 and F32, which cost about 2,000 yuan - almost a third cheaper than earlier models.
"We don't only care about price," a Hanwang official surnamed Zhao said. "Instead, we aim to provide users more added value, such as an online book store and built-in books."
On the other hand, the advent of new technologies has lit a fire under price competition, analysts said. That may force small firms out of the market.
At the same time, new national e-book standards may enhance the standing of market leaders like Hanwang and Teclast, analysts said.
Hanwang is already cooperating with domestic magazines and newspapers to provide paid or free electronic reading services to users and will continue to develop those channels, said Hanwang Chairman Liu Yingjian.
"It sounds nice to be able to read a newspaper on a reader, but I doubt whether Chinese newspapers and magazines are interesting enough for us to be willing to pay for them," said Wang, as he contemplates which device to buy.
"It's irresistible for me to have a cool device with more functions," said Wang of the more expensive iPad. "But price is an issue."
Wang is one of many consumers caught in a rapidly changing Chinese market, where the e-book sector is starting to cool and faces restructuring, new technology is developing, the iPad is growing in popularity and fierce competition is pressuring prices.
The confluence of all these factors has halved the share price of market leader Hanwang Technology from a 52-week high in just two months. Also affected are smaller Taiwan manufacturers and domestic shanzhai companies, or copycat product makers with no brand and low quality.
"It's time for the market to change and diversify," said Fang Li, an analyst at Beijing-based research firm Analysys International. "Every player faces both opportunity and challenge now."
An e-book (short for electronic book) is a digital media equivalent of a conventional printed book. The device displays e-books with e-ink (electronic ink) technology. It may be a device specifically designed for that purpose, such as Amazon's Kindle and Hanwang's products, or with multiple functions, like Apple's iPad.
In 2009, China's e-book market took off and the sales hit 400,000 units from almost zero in the previous year, according to Zero2IPO, a Beijing-based research firm.
In the second quarter, China's e-book sales slipped to 231,200 units from 249,100 units in the first three months of the year, the first quarterly decline, according to Zero2IPO.
"The debut of replaceable devices like iPad and the rapid development of more sophisticated e-book screens have made firms take a more cautious approach," said Zhang Yanan, a Zero2IPO analyst.
In the international market, major e-ink e-book vendors like Kindle and Barnes & Noble have come out with all guns blazing in the war against iPad.
In June, the Kindle reader producer slashed the price for hand-held devices in the US from US$259 to US$189, a 27 percent drop. Barnes & Noble reduced the price of its Nook reader 23 percent to US$199 on 3G and Wi-Fi models. It also launched a new entry-level Wi-Fi only model at US$149, a third of the entry-level price iPad charges for 16G and Wi-Fi units.
In April, Apple launched the iPad tablet PC in the United States, which introduced the iBook function to compete with the likes of Kindle. Apple sold more than 3 million units within the first three months, and the device is scheduled to debut in Hong Kong.
Compared with LCD-screen devices like iPad, e-ink readers have the advantage of greater portability, better readability in bright sunlight and a long battery life. They create a "paper-like" effect while reading.
Recent technology upgrades at E Ink Holding Inc, the world's biggest supplier for e-ink screens, intensified price competition and enhanced their attraction.
Taiwan-based E Ink launched the next-generation electronic paper display technology, called Pearl, this month. It features a 50 percent higher black-and-white contrast ratio, making texts and pictures sharper.
The more advanced technology has forced vendors to cut prices to clear stockpiles of older products.
Taiwan-based Teclast Electronics Co, the No. 2 e-book reader vendor in the domestic market, has adopted aggressive strategies to grab market share from leader Hanwang. It slashed the price of entry-level product K3, from 1,499 yuan (US$221) to 999 yuan, probably the first branded e-book reader to sell below 1,000 yuan in China.
The average price of a China's e-book reader will drop to below 2,000 yuan in 2010 from 2,500 yuan last year, predicted a report from Galaxy Securities.
The share price of Shenzhen-listed Hanwang, the only listed e-book reader firm on the Chinese mainland, dropped more than 60 percent from its peak price to 104 yuan on Wednesday, after slumping to as low as 89 yuan last week. Analysts have expressed concern about its stockpiles and mounting competition from replaceable devices like iPad and some smartphones.
Hanwang, which has enjoyed 70 percent of the China market, kicked off new, cheaper products F30 and F32, which cost about 2,000 yuan - almost a third cheaper than earlier models.
"We don't only care about price," a Hanwang official surnamed Zhao said. "Instead, we aim to provide users more added value, such as an online book store and built-in books."
On the other hand, the advent of new technologies has lit a fire under price competition, analysts said. That may force small firms out of the market.
At the same time, new national e-book standards may enhance the standing of market leaders like Hanwang and Teclast, analysts said.
Hanwang is already cooperating with domestic magazines and newspapers to provide paid or free electronic reading services to users and will continue to develop those channels, said Hanwang Chairman Liu Yingjian.
"It sounds nice to be able to read a newspaper on a reader, but I doubt whether Chinese newspapers and magazines are interesting enough for us to be willing to pay for them," said Wang, as he contemplates which device to buy.
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