DECEMBER 29, 2009 Race Heats Up to Supply E-Reader Screens
By TING-I TSAI And GEOFFREY A. FOWLER Wall Street Journal http://online.wsj.com/article/SB10001424052748703344704574610180881279184.html?mod=WSJ_newsreel_technology TAIPEI—Prime View International Co. has overcome technological hurdles to dominate the burgeoning market for electronic-reader screens. Now this small company faces encroaching competitors and even-newer technologies. The company's E Ink screens are used by the three most-popular brands: Amazon.com Inc.'s Kindle, Barnes & Noble Inc.'s Nook and Sony Corp.'s Reader. That gives Prime View a near monopoly of a market where global sales are expected to surge to 12 million units in 2010 from five million this year, according to research firm iSuppli. With e-reader sales booming, other companies, many of them far bigger than Prime View, want a piece of the action. Rivals in Taiwan, Japan and the U.S. are racing to roll out new technologies and features like color screens—on the top of users' wish lists, and key to newspapers and magazines making the transition to e-readers. At the annual Consumer Electronics Show in Las Vegas next week, at least a half dozen companies will unveil new e-reading devices, including Plastic Logic Ltd., Hearst Corp.'s Skiff, Spring Design Inc. and Entourage Systems Inc. Some of these devices use Prime View's screens; others feature two screens, including liquid crystal displays. And a new generation of integrated gadgets—such as Apple Inc.'s anticipated tablet device—threatens to erode the popularity of dedicated e-readers by offering color touch screens and many of the functions of a regular computer. Screen suppliers have been wooing Sony, the first big company to use Prime View's screens in its e-readers. Steve Haber, president of Sony's digital reading division, says "many different companies are approaching us to use their screen technology going forward." Prime View's technology displays an image that is easy on the eye and requires little power, but cannot produce color or render videos. The company is promising new products for next year, including color, and is working on advances like a flexible device and touch-sensitive screens. It is ramping up spending on research, but it's not clear whether the advances will be ready in time to fend off new entrants. "It enables you to have magazines, textbooks and newspapers in color," said Jim Cathey, the Qualcomm vice president overseeing Mirasol. He claims Mirasol also uses less power than Prime View's technology. Scott Liu, Prime View's chairman, is confident the company can stay ahead. "We believe we can keep leading in technology, production quality, cost and consumer awareness," he said in an interview. Prime View was established 17 years ago by former Chairman Ho Shou-chuan, whose family operated a Taiwanese paper company. Mr. Ho worried that paper might someday be replaced by digital screens. Prime View started manufacturing liquid-crystal display, or LCD, panels used in cellphones and car-navigation systems. It faced fierce competition from larger rivals including AU Optronics Corp., which were pouring cash into bigger, more cost-effective factories. Prime View started looking at other screen technologies where it could gain a technological edge instead of competing on cost. In 2005, it acquired the e-reader division of Philips Electronics NV, the beginning of a global buying spree. The purchase included a deal to make e-readers for Sony. Prime View followed by making them for Amazon in 2007. With the market starting to take off, it bought a Korean company for $300 million to expand production capacity. This June, it made a critical deal, buying E Ink Corp. for $215 million. The U.S. company, started at the Massachusetts Institute of Technology, had been licensing its electronic-ink screen technology to Prime View. Buying it gave the Taiwanese company greater control. E Ink uses tiny capsules filled with charged black-and-white particles to give the appearance of ink on paper. The company says it is working on color screens, which place a color filter on top of the existing black-and-white technology, and they will be ready to ship to manufacturers by the end of next year. But Sriram Peruvemba, E Ink's vice president of marketing, says the color screens may not make it into products by the 2010 holiday shopping season. E Ink's color screens feature less saturation than regular computer screens, so are only suitable for newspapers, magazines and textbooks, and won't refresh quickly enough to show video. Mr. Peruvemba says E Ink is developing a new generation of richer color displays. Prime View's acquisitions, and its continued involvement in the volatile LCD business, have made for rocky financial performance. It lost money last year. This year, with e-reader sales growing, analysts expect the company's revenue to rise by about 37% to more than $500 million. But they expect Prime View to report another loss this year, before turning a profit in 2010. Prime View's new competition includes old rival AU Optronics, now the world's third-largest LCD maker with revenue of about $13 billion last year. AU Optronics aims to grab 30% of the e-reader screen market within two years, and is targeting clients including Sony, Amazon, and Barnes & Noble, says C.T. Liu, its senior vice president of consumer-product displays. AU Optronics has acquired 30% of U.S. company Sipix Imaging Inc., which says its technology enables thinner, more flexible displays at lower production costs. AU Optronics "can immediately allocate lots of resources" to e-reader screens if it chooses, says Calvin Hsieh, analyst in Taipei at research firm DisplaySearch. Prime View has responded, in part, by teaming up with other LCD makers, including Chi Mei Optoelectronics Corp. and LG Display Co. On Monday, LG signed a cross-licensing deal with a Prime View subsidiary and bought $30.5 million of the unit's bonds. Young Soo Kwon, LG Display's chief executive, said cooperation with Prime View will help boost LG's share in the e-paper display market to 20% next year from 15% this year. Even companies outside the display industry are piling in. Delta Electronics Inc., a Taiwanese maker of power supplies, is using a screen technology developed by Japanese tire maker Bridgestone Corp. Another potential competitor is Pixel Qi Corp., which recently began producing 10-inch screens for use on tablet-style devices that feature color and video but use one-half to one-fourth as much power as an LCD screen. The company, which spun out of technology developed for the low-cost One Laptop Per Child program, hopes it can keep the prices of its screens low by using standard LCD manufacturing materials and processes. -- ================================ George Antunes, Political Science Dept University of Houston; Houston, TX 77204 Voice: 713-743-3923 Fax: 713-743-3927 Mail: antunes at uh dot edu *********************************** * POST TO [email protected] * *********************************** Medianews mailing list [email protected] http://lists.etskywarn.net/mailman/listinfo/medianews
