eReaders Becoming Niche Market Players?

I've always been a fan of the Kindle and other eReader type devices, especially when compared to bulkier and heavier tablets that are difficult to view in direct light conditions. Lately though, I've been wondering how long eReaders would continue to exist as tablets become lighter and smaller with better displays. Well, I just read an interesting study from ABI Research titled eReaders and the Digital Publishing Market that takes a look at where the eReader market is going.

Here's some details from the ABI report:

• Eleven million eReaders are projected to be shipped globally in 2012, down from a peak volume in 2011 of 15 million devices.
• The growing popularity of media tablets along with declining US “baby boomer” population and lack of organized digital bookstores outside of the US and Western Europe will reduce the eReader opportunity over the next five years.
• Despite the average tablet selling for more  than $465 as a result of Apple’s dominant market position, tablets are expected to outsell eReaders 9 to 1 this year. 
• Over the next five years, annual eReader shipments are projected to drop by a compound annual growth rate (CAGR) of 6.1%. In contrast, global media tablet shipments are predicted to increase from approximately 102 million annual device shipments in 2012 to nearly 250 million in 2017.

All bad news for eReaders. Well, not so fast.... the report continues... However, eReaders maintain advantages over media tablets for reading purposes. Electronic paper (ePaper) displays are able to better replicate the print reading experience and are usable in direct sunlight conditions unlike LCD technologies. The eReader battery life of weeks between charging is significantly greater than the media tablet. And of course, eReaders are priced significantly less than entry-level tablets.

ABI senior mobile devices analyst Joshua Flood is quoted “Regardless of the tremendous historical eReader success, the market tides have already begun to turn. Nevertheless, the eReader market will not be totally cannibalized by media tablets. We believe there will always be a niche market for the dedicated reading device for voracious readers, business travelers, and educational segments, particularly ones that are low-priced.”

ABI senior practice director Jeff Orr continues “The decline of buying audiences for dedicated digital readers in the US is more rapid than the digital publishing ecosystems organizing for growth in Asia or Eastern Europe. Development of content digitalization systems and services in all world regions should continue without delay as the effort will be necessary for developing mobile app catalogs that provide easy search, discovery, and monetization.”

Be sure to check out the full ABI Research report.

State of the Internet Industry

Yesterday, at the Web 2.0 Summit in San Francisco, Morgan Stanley analyst Mary Meeker gave an incredibly paced presentation on the state of the Internet industry. Here’s some highlights from her presentation compiled by Ben Parr at Mashable:

• 46% of Internet users live in five countries: the USA, Russia, Brazil, China and India.
• There are 670 million 3G subscribers worldwide, 136.6 million in the U.S. and 106.3 million in Japan.
• iOS devices reached 120 million subscribers in 13 quarters, far faster than Netscape, AOL or NTT docomo’s growth rates.
• Nokia and Symbian used to own 62% of the smartphone market (units shipped). Now it’s only 37%, mostly due to Android and iOS.
• The average CPM for social networking sites is at only $0.55. Meeker thinks this will increase and normalize in the next few years. She also believes that inventory on Facebook is one of the most under-monetized assets on the web.
• It took e-commerce 15 years to get to 5% of retail. Morgan Stanley predicts mobile should get to that same level in five years.
• Streaming video is up to 37% of of Internet traffic during traditional “TV hours.” Netflix is the biggest contributor to this, followed by YouTube.
• Seven of the companies that were in the top 15 publicly traded Internet companies in 2004 are not in that list in 2010.
• Interest payments and entitlement spending is projected to exceed government revenue by 2025. In other words, the U.S. government is facing a real financial crisis soon.

Here’s an embed of Mary's presentation:

Internet Trends Presentation -