Barnes & Noble announced plans this week to spin off a company built around its Nook e-reader after revenues for its Nook business fell 22% versus the previous year. Sales for the 2014 fiscal year fell 35%.
While Amazon doesn't break out sales for its Kindle e-readers, it's in the process of launching its first smartphone. The company has a lot of reasons for this, but the fact that more and more people are reading ebooks on their phones is likely a factor.
The outlook for e-readers, however, is more dire. Forrester forecasts that e-reader sales will fall to as low as 7 million in the U.S. by the end of 2017, compared to a high of 25 million units in 2012.
"Those 7 million will be the people who read more than two books a week," says James McQuivey, principal analyst at Forrester. "Tablets and phones have already begun the process of making e-readers a 'nice to have.'"
McQuivey thinks Amazon will eventually give Kindles away as a thank you gift to consumers who renew their Prime memberships.
E-readers have been losing steam for some time. IHS iSuppli claims the e-reader market peaked in 2011. By 2015, it predicts unit sales of dedicated e-readers to be just 7.8 million in the U.S.
The figures don't necessarily mean that readers are rejecting e-readers en masse. Unlike smartphones or tablets, e-reader models don't really evolve, so there's no need to upgrade. A Kindle you bought in 2011 is pretty much the same as the one you'd buy in 2014. As McQuivey notes, if you own a tablet, a single-function e-reader is also a luxury. A quarter of Americans had a tablet in late 2012, according to Pew Internet Life, and 19% had an e-reader.
The device that's really killing the e-reader market, however, is the smartphone. A Pew report from 2012 found that 29% of readers of e-books consume them on their phones. Now that bigger screens are the trend — the next iPhone is expected to have 4.7- and 5.5-inch screens vs. today's 4.1 inches — we can expect even more phone-based reading.
All of which is to say that e-readers are looking like the next iPod. Introduced in 2001, iPod sales peaked nine years later as the iPhone took off and cannibalized sales. Since iPhones embedded all the functions of an iPod, there was no need to buy one. A similar fate is now befalling e-readers.
For Amazon, the iPod-ization of e-readers won't mean much — the company only launched the Kindle to sell books anyway. It seems to be an awkward time to start a new Nook company, though. Happily, Nook has a thriving college textbook business, one that has nothing to do with Nook tablets. That business doesn't even carry the Nook name anymore. In April, Barnes & Noble transitioned Nook Study to a new brand, Yuzu.
Despite mass rejection of e-readers, they still have a niche. Like iPods, they're great gifts for kids too young to be trolling the Internet. Battery life also makes them attractive. Amazon's Kindle Paperwhite's battery lasts 28 hours versus about 10 hours for an iPad, making them attractive for long plane trips.
But if you're not a travler or a book fan and don't already own an e-reader, chances are you'll never be in the market for one.
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