In 2010, Sales Will Surge In An Increasingly Complex Market All the dynamics that fueled growth in 2009 will be compounded next year, and we expect more changes that could push US eReader sales beyond 6 million for 2010, bringing cumulative sales to more than 10 million by year-end 2010. This means that the growth we had initially anticipated occurring over a five-year period will happen in just three years. There are a number of changes coming to the eReader market in 2010 that will both turbo-charge adoption and make forecasting the growth of the market increasingly complex. In 2010: The category will broaden beyond E Ink displays. 2010 will be the year that E Ink loses some of its near-100% market share of eReader displays. At least one device will launch next year that will be marketed as an eReader but that won't use an E Ink display; the display will be in color and will have a refresh rate fast enough to display videos, but the user experience for reading text will not be as high quality as E Ink. Two types of E Ink competitors will emerge next year: 1) companies that make lower-cost electrophoretic displays (the same technology that E Ink uses); and 2) companies that make different kinds of low-power displays, including transflective LCDs, that can support color and video. Competition will bring lower prices — the E Ink display module's prices have already fallen by 25% this year — and will provide a shortcut to color and video. If non-E-Ink-based devices take off in a big way next year, eReader sales can easily surpass our estimate of 6 million units in 2010. And then, of course, there's the highly anticipated Apple "tablet," a 10-inch device rumored to be launching in late 2009 or early 2010. The tablet, if it does indeed launch and assuming it supports apps, will add to the 20 million iPod touches and 30 million iPhones that Apple has sold to date, creating an enormous installed base for eBook app downloads, which currently have millions of subscribers. If Apple decides to support ePub and PDF files in its iTunes store, it will become a major player in the eBook market overnight. Apple's products are a much better fit for colorful, interactive content, such as that which magazine and textbook publishers hope to offer consumers. Flexible displays, new screen sizes, more touch, color, and video will expand consumer choice. Individual device makers like Plastic Logic have been working on flexible eReaders for years, but 2010 will see flexibility move further up the supply chain as display module makers make this technology available to all their clients. This means that any eReader manufacturer, including Amazon, will have access to the technology. What this will mean for consumers is as yet unknown: Will consumers pay more, and how much more, for an eReader device that's less breakable than the current Kindle? (see endnote 12) 2010 will also see more large-screen devices, as well as a growing market for small-screen devices like the Sony Pocket Reader. More touch-operated eReaders will launch in 2010, as will eReaders with color and video, such as the ASUS dual-display touchscreen PC, which debuted in concept form at CeBIT in March 2009. (see endnote 13) (The first E Ink-based color display will not be available until late 2010; video will not be available for E Ink displays until 2011 at the earliest.) Barnes & Noble will present serious competition to Amazon. Barnes & Noble (B&N) has been steadily building momentum for its foray into the eBook and eReader market. In March 2009, B&N bought eBook seller Fictionwise for $15.7 million in cash. In July, it launched its eBookstore with more than 700,000 eBooks, which can be accessed through the Web and via its eReader application for iPhones, BlackBerrys, and other Internet-enabled devices. B&N is the primary eBookseller on the IREX Digital Reader 800, which will be available at Best Buy and other retailers this holiday season, and it's also a content provider on the Plastic Logic eReader device, expected out in early 2010. All of these steps have laid the groundwork for B&N becoming a larger presence in the eBook market, but they've done nothing to help B&N steal share from Amazon. So what's B&N's next move? We expect that B&N will announce its own, B&N-branded device before the end of 2009. In 2010, B&N will become a more visible, aggressive competitor to Amazon, leveraging its customer relationships, in-store real estate, publisher goodwill, and marketing power to confront Amazon head-on and present consumers with a real alternative to the eCommerce giant, especially in the content arena.