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E Ink hunting for the next big thing

By Michael B. Farrell
Globe Staff / June 4, 2012
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E Ink Corp. invented a display screen that was easy on the eyes, and pioneered the worldwide boom in electronic reading devices like the Kindle from Amazon.com Inc.. But there’s another boom in town, and the 15-year-old Cambridge company is searching hard for new inventions that use its unique technology, before tablet computers like Apple Inc.’s iPad render it obsolete.

“We saw that our growth in the e-reader space has slowed, and revenue dipped,” said Sri Peruvemba, chief marketing officer for E Ink. “In the past one or two years, we’ve been saying that we need to get into a lot of other things.”

E Ink will reveal a number of those new concepts at Display Week, the annual event by the industry group Society for Information Display, which began Sunday at the Boston Convention & Exhibition Center. The convention is expected to draw 8,000 industry insiders, and more than 200 exhibitors showing off the latest in television screens and 3-D technology.

For E Ink, it’s an opportunity to create buzz around some concepts that are very different from the e-readers that made the company’s fortune, from energy-saving traffic lights to a smartphone case that can display a device’s remaining battery life.

The common element is E Ink’s core technology: a reflective screen that simulates the look of ink on paper and only sips at a battery’s power.

Take that traffic light. Peruvemba said E Ink placed its reflective display behind a bank of 24 light-emitting diodes, or LEDs, to boost a stoplight’s brightness while saving electricity. A conventional stop light uses hundreds of LEDs, and as much as 90 percent more electricity.

The company has several inventions that utilize the E Ink screen in similarly creative ways. It’s developing an ultra-lightweight display for bicycles that could show speed and rider heart rate in real time, and a prototype for that smartphone case, built to offer a continuous display of device battery life, time, and the number of messages received. And there are other ideas in play, including a digital music stand; a digitized tape measure; and a shopping bag that changes design using electronic displays.

None of those inventions are in production yet, and few people have seen the concepts outside E Ink’s research labs. That makes this week’s convention a big coming-out party for E Ink’s intended future.

As tablet computers such as the iPad, with its liquid crystal display screen, come down in price and improve in quality, e-reader sales are slipping farther behind, said Tom Mainelli, an analyst with International Data Corp., a research firm based in Framingham.

Tablets simply give users more options, he said. They can watch movies or surf the Web. The e-reader, on the other hand, is built for one purpose: reading.

“The average consumer does a lot more than read books on their devices,” he said.

The market for e-readers is still growing, according to the most recent numbers, but analysts said that growth is slowing. Shipments of dedicated reading devices rose from 25 million in 2010 to 56 million in 2011, according to IDC data. But demand for tablets is growing twice as fast, rising from 2010’s 39 million units shipped to 138 million last year, and is on the rise.

That shift has contributed to lower demand for the displays made by E Ink. In the first quarter of 2012, shipments of electronic displays for e-books dropped to 3.4 million, down from 4.4 million for the same period last year, according to DisplaySearch, an industry research firm based in Santa Clara, Calif.

And E Ink’s income has fallen sharply. It reported a $26 million loss in net income for the first quarter of 2012, down from a positive $43 million in the previous quarter. In a statement, Scott Liu, the chairman of E Ink Holdings Inc., the Taiwanese parent company of E Ink, said the drop resulted from seasonal adjustments for orders, and he expected an increase in sales later this year.

That’s certainly part of the story, said Mainelli, noting that e-readers were big sellers last Christmas. Still, he said, 2011 may have been their high watermark year.

Over the past few years, E Ink has been moving into other markets, but not with the success of e-reader screens. It’s selling small displays to banks who layer its flexible electronic paper on credit cards to display security codes. E Ink displays are also showing up on watches, cell phones, and in outdoor advertising.

Peruvemba thinks E Ink-powered e-readers still have a big future, at least in one area: “I believe the real killer app for our technology is education textbooks,” he said.

But analysts point out that there’s growing competition from tablets in that market, too.

Helge Seetzen, secretary for the Society for Information Display, which is based in Campbell, Calif., said a reflective, energy-saving color screen — which E Ink has developed — could revive the market. “E-readers are still at an earlier stage of technology development, with at least the potential to reach color and video capability in the future,” he said. “Purely as a reading device, it is hard to beat an e-reader.”

Michael B. Farrell can be reached at michael.farrell@globe.com.

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