PVI revenues drop - weakening e-paper orders!

[Alexander Turcic]

We're a bit heavy-hearted to report the news, but it appears that recent e-paper sales aren't as rosy as some analysts and industry insiders like us to believe (while others are a bit more conservative). Details are sketchy at this point, but Digitimes reports that last month, PVI has suffered from a drop in revenues by more than thirty percent, which is at least partly caused by "weakened e-paper orders from the US." Meanwhile a display competitor confirmed that "the weak economy is expected to continue, dampening demand in the US market."

So what does this exactly mean? Granted, e-book readers are not exactly low-budget, but is it possible that the current economic downtrend has already a negative impact on e-book reader sales? Is it a coincidence that just two weeks ago, Amazon dropped the price of its Kindle reader?

[delphidb96]

No doubt! The weakening US economy is *KILLING* so much of the retail market. If PVI would just cut volume prices to something approaching 'reasonable', that would allow device manufacturers to lower wholesale prices and, maybe, entice people away from dead-tree. But the basic models that are currently available just aren't appealing at the current price-point.

Derek

[Donnageddon]

Holy Carp! I am buying all the eInk screens I am able to!

We must lobby congress to pass tax breaks for the eInk industry!

Personally, I blame the usual suspects. France, I am watching you! (sorry Zelda)

Donn

P.S. I hope I am not overreacting.

P.S.S. If rumors were wishes, horses would ride for free.

[bbusybookworm]

You know, The weakening US market might get Sony and Amazon to get off their backsides and launch the Readers outside the US.

After all while the economic slowdown is affecting the whole world, it is mainly concentrated in the US.

As such most companies are looking to diversify their holding outside the states to limit their losses.

[Karel]

Originally Posted by delphidb96

If PVI would just cut volume prices to something approaching 'reasonable', that would allow device manufacturers to lower wholesale prices and, maybe, entice people away from dead-tree. But the basic models that are currently available just aren't appealing at the current price-point.

Derek

The display is by far the most expense component in any e-reader, however as long as there is only one supplier of electrophoretic ink, we will not see any substantial price drops.

[tribble]

Originally Posted by Karel

The display is by far the most expense component in any e-reader, however as long as there is only one supplier of electrophoretic ink, we will not see any substantial price drops.

Which brings up PlasticLogic again, whose factory in Dresden is presumably ready to produce. I guess we will see first consumer products in Q1 2009.

[beachwanderer]

Plastic Logic won't be taking off as soon as that, i think:

Careers galore: http://www.plasticlogic.com/careers.php

[igorsk]

Originally Posted by delphidb96

If PVI would just cut volume prices to something approaching 'reasonable', that would allow device manufacturers to lower wholesale prices and, maybe, entice people away from dead-tree.

With the reported yield numbers I don't think they can do much to lower their price unless they improve the production process. Maybe if E-Ink licensed their tech to more manufacturers...

[VillageReader]

Yeah, the gas prices are hitting hard. When I bought my Iliad (standing in line early 2 years ago) I could fill my tank for around $15. Last month I had a fill up that was a tad over $60. And I do that 3-4 times a month (even though the car is a fuel efficient diesel engine getting nearly 50MPG I have a relatively long drive to work). Doesn't take long for most people cut back on non-essentials with prices that high. Particularly when you consider that 50% of what has been sold in the last several years would probably need to go downhill with a tail wind to get half the mileage I do.

[TallMomof2]

PVI should do what Nintendo has done with the new Wii Fit. Sell most of the units to Europe where the currency is much stronger than the United States. From a personal perspective, I'm selling a lot more to Europe than here. Even with the substantial shipping costs it's still cheaper to buy here and ship there.

[axel77]

For me its logical in the sense of product life time events.

The Kindle, as far as I know biggest seller, was opened to the market, then a lot of people bought it. Now everyone who regulary vists amazaon, and would have bought a Kindle, has already one. Now it takes much more time to have the mouth-to-mouth "propaganda" work, and convincle people to buy one, by seing a friend to have one etc. This is still a growth, but not as fast as the intro to the market.

As iLiad-lover I'm sorry to not have mentioned iLiad into this calculation, but AFAIK iLiad sales hardly pay a big role in total eInk sales. Not? From my "mouth-to-mouth-propaganda" aspect, there are people who like me always wanted a product like this, and are quickly converted to buyers. However for the "normal" people I hand over the device, two things quickly turn them off. a) Its slow. (And this is not only the screen refresh rate people complain about, sometimes you press a button, 5 seconds nothing happens, then the screen refreshes for a second). b) when playing around, they notice the writing gap, along with the text appearing delayed. c) then they ask how much does it cost? Then they summerize "Ah well not for me then"...

[Karel]

Originally Posted by axel77

For me its logical in the sense of product life time events.
As iLiad-lover I'm sorry to not have mentioned iLiad into this calculation, but AFAIK iLiad sales hardly pay a big role in total eInk sales.

That is because the data is based on 6-inch displays, that's why iRex is not mentioned, but we take 100% share on the 8.1-inch display production

[VillageReader]

For a second there I thought I dropped in on a spam posting about gaining 2".

[Argel]

If Amazon have a glut of Kindles on their hands they could always ship them to Europe - with or without wireless chips!

But seriously, I'm not sure that the figures quoted say much about the potential ebook market. The original story lays the blame for the fall in production mainly at the door of a fall in demand for hand-held devices (not ebook readers) in China. At this moment the Shanghai stock exchange stands at half its peak in 2007, so it wouldn't be surprising if discretionary purchases like e-ink devices were taking a hammering.

Consumer confidence in both the US and much of Europe is also low, so it's difficult to read the significance of sales levels. Almost no-one 'needs' an ebook reader and there very few examples out there in people's hands so far to create desire among friends and family. In those circumstances if it is true that, on Amazon, Kindle books are taking an average of 6% of sales where they are published in parallel with paper editions (as Bezos claims), I think that is a truly astonishing level of market penetration in such a short time.

[Gadzooks Mike]

It's not the price of the readers that are holding back sales, it's the price of the books. No paper, no printing, no shipping, no storeage = savings of $1 if you're lucky. And I can't even give them to my friend after I've read them.