Johnny Makkar is intent on buying a digital book reader. Yet he won't consider any of the more than two dozen new devices introduced in recent months, many of them at the just-completed Consumer Electronics Show in Las Vegas. For Makkar, a resident of Fairlawn, N.J., with a background in marketing, only two manufacturers will do, and one has yet to unveil a reader. "I want the e-book buying process to be as effortless as possible," says Makkar, 26. "Only Apple (AAPL) or Amazon (AMZN) are going to be able to provide that."
Standing out may prove challenging for many new entrants to the market for e-readers, expected by Forrester Research (FORR) to double to 6 million devices this year. "Half the e-readers that have been announced [at CES] won't be around a year from now," says Forrester analyst James McQuivey.
At CES, some e-reader hopefuls played to niche audiences; Plastic Logic pitched its QUE to business users. Others played up tech breakthroughs; Spring Design introduced a dual-screen device called Alex. All are vying against Sony (SNE), which pioneered e-readers with its first device in 2005, and Amazon, which has been selling versions of its Kindle for just over two years. Forrester expects Kindle sales to reach 3 million and Sony to sell from 1.5 million to 2 million e-book readers in 2010.
Even the established vendors could lose buyers this year. Apple is expected to put out a tablet computing device that many analysts expect to include the ability to read digital books. "We are in a market where consumers no longer believe in one device serving one industry or one function," says Forrester's McQuivey. Single-purpose products such as the Kindle might be ignored by customers who prefer a multipurpose device from Apple.
Upstarts may benefit from focusing on specific kinds of customers. For instance, enTourage Systems said school textbook publishers will custom-format several books for its new device, the eDGe, which was demonstrated at CES. With its QUE proReader, Plastic Logic included a large touchscreen reader and the ability to store and view business documents such as those made with Microsoft (MSFT) Excel and Adobe Systems (ADBE) PDF software. "If I'm starting from scratch, I'd probably go after one of the niches," says Citigroup (C) analyst Mark Mahaney.
Plastic Logic CEO Richard Archuleta says the company doesn't intend to compete with the existing e-reader makers. "Amazon proved that you could build a business out of this," Archuleta says. "Our concept was always to meet this unmet need and create this new category that we didn't think anybody was focused on."
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