Worldwide e-reader sales go through the roof, sort of

Worldwide e-reader sales are predicted to surpass 11 million units in 2011 – 68.3 percent increase from 2010.

That’s the lowdown from a recent report by Gartner, which also forecast that worldwide connected e-reader sales to end users will total 6.6 million units in 2010, up 79.8 percent from 2009 sales of 3.6 million units.

E-readers have carved out a solid niche in the consumer electronics market due to their portability, long battery life, solid display technology (although most lack colour screens) and relatively inexpensive retail prices.

However, while the sector is booming, Gartner warns that there could be trouble ahead saying that the market for e-reading devices, including portable devices that use an E Ink, e-paper or similar display technology, has become crowded and is at risk of commoditisation due to developments in adjacent markets such as those for media tablets. It said this was because media tablets can offer a “compelling experience for electronic magazines and newspapers, due to their widespread adoption of displays that show colour and support full-motion video.

“By incorporating e-reader functionality, media tablets can perform many different functions, including supporting e-reader applications.”

Back to the e-reader market, Gartner pointed out that the connected e-reader market has grown dramatically during the past two years, driven by sales of Amazon’s e-readers, primarily in North America, which is the dominant region for e-reader sales.

“We predict that [this region] will account for sales of just over four million units in 2010,” said Hugues De La Vergne, principal research analyst at Gartner.

“North America will remain a key market through 2014, although its dominance will decline significantly as regions such as Western Europe and Asia/Pacific become the leading locations for growth. Growth in North American and other markets will remain constrained by the success of media tablets, such as the Apple iPad.”

And although Amazon, Barnes & Noble and Sony are currently enjoying their success in the market, their crowns could soon be knocked off with Gartner claiming that new competitors may well appear in the future with low-cost devices subsidised by content owners.

Large consumer electronics and PC firms such as HP and Dell are also trying get into this market.

However, in a bid to stay on top of media tablets, e-reader manufacturers need to try harder and target “avid readers who may see the value of a stand-alone device that performs particularly well,” said Allen Weiner, research vice president at Gartner.

“E-reader vendors will also need to offer lower prices than for more fully featured media tablets. This will entail smaller profit margins and potential hardware subsidies at retail, and/or the ability to obtain lower-priced components. We think few end users will buy both an e-reader and a media tablet, so it is important that e-readers retain a price advantage,” he added.