As tablets boom, e-readers feel the blast

By Doug Gross, CNN February 28, 2013

 

The Kindle Paperwhite, left, and Nook Simple Touch are leading e-readers, but booming tablet sales could spell doom.

STORY HIGHLIGHTS

• As tablet sales skyrocket, dedicated e-readers have suffered
• Barnes & Noble is expected to announce dismal sales for its Nook e-reader line
• Amazon leads the field, but has also done well with its Kindle Fire tablets, online store
• Observers say reading experience on tablets has improved

(CNN) -- One thing appeared certain when Barnes & Noble announced Thursday how much money its Nook e-readers brought in over the past three months: The news would be lousy.

And it was. Revenue from the company's Nook division for its fiscal 2013 third quarter declined 26% from the same period a year ago, primarily as a result of slumping sales of the devices.

Is the bookseller just losing ground to rival Amazon and its market-leading line of Kindles? Perhaps. But many tech analysts see something else happening: the booming market for tablet computers is starting to make the dedicated e-reader obsolete.

"It's not that the Nook failed," said James McQuivey, a digital analyst at Forrester Research. "It's that the world of tablets exploded, going faster than anyone expected, putting us in a place where tablets are now a fundamental part of our computing and lifestyle entourage, not just a handy device to consume a bit of media."

Apple rocked the computing world in 2010 with the release of the iPad, introducing the world to the concept of user-friendly tablets. While they already existed in some form, tablets were pretty much unknown to all but the most tech-savvy among us. Since then, all Apple has done is sell more than 120 million of them.

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Competitors struggled to come up with a worthy alternative until late the next year, when Amazon -- already a leader in the e-reader market -- rolled out its simpler, smaller Kindle Fire, priced at $199, far lower than the iPad.

Its relative success not only inspired the launch of devices such as the Google Nexus 7, but it likely nudged Apple into the new midsize tablet market with the iPad Mini.

The net effect? Anyone interested in a tablet now probably has a price point with which they'll be comfortable. And tablets, which are priced similarly to top e-readers, also work well for reading e-books. Throw in Internet, apps and e-mail -- all on a full-color tablet screen -- and e-readers suffer by comparison.

This trend has been particularly unkind to the Nook.

During the quarter that included last year's holiday season, Barnes & Noble's Nook business, which includes e-readers and e-books, suffered a 12.6% sales decline over 2011, bringing in just $311 million.

Earlier this month, the company said the Nook-related losses they'll announce Thursday would be even bigger than previously expected. The bad news came despite Barnes & Noble slashing the price of its Nook Simple Touch e-reader in December to $79.

Amazon doesn't release detailed sales figures. But the Kindle clearly emerged as the market leader in the past couple of years, after doing neck-and-neck battle with the Nook early on. In the last quarter of 2012, the company said it increased its sale of e-books and other content for Kindles and similar devices by 22% over the same quarter in 2011.

But analysts expect that even Amazon's success with dedicated e-readers will fade.

"It's a rough market to compete," said Michael Gartenberg, a tech-industry analyst with research firm Gartner Inc. "On one hand, devices like the iPad dominate the consumer tablet experience which includes reading. On the other hand, less demand for dedicated devices had helped Amazon, which already established a strong brand presence with Kindle as part of a much larger personal-cloud ecosystem."

Full story at CNN