IHS iSuppli said that after "spectacular" growth during the past few years, the e-book reader market is now on an "alarmingly precipitous decline," all thanks to the growing popularity of tablets.
How alarming? Well, the firm predicts that shipments of e-book readers will tumble 36 percent this year to 14.9 million units and then drop another "drastic" 27 percent next year to 10.9 million units. By 2016, IHS iSuppli predicts, the e-book reader market will total just 7.1 million units, equal to a loss of more than two-thirds from its peak volume in 2011.
According to Jordan Selburn, senior principal analyst for consumer platforms at IHS iSuppli:
The rapid growth -- followed by the immediate collapse -- of the ebook reader market is virtually unheard of, even in the volatile consumer electronics space, where products have notoriously short life cycles. The stunning rise and then blazing flameout of ebooks perfectly encapsulate what has become an axiomatic truth in the industry: Single-task devices like the ebook reader are being replaced without remorse in the lives of consumers by their multifunction equivalents, in this case by media tablets.
By comparison, the electronics industry should ship 120 million tablets this year and 340 million by 2016 -- a magnitude of sales exceeded only by mobile phones.
What this means for the industry is that e-book readers are likely to continue selling at manufacturing cost or even less in the future. Sales prospects could improve if prices drop further, the firm said, though it doesn't believe the devices will regain the popularity they briefly savored.
In addition, the pressure for e-book reader manufacturers to keep costs to an absolute minimum will be extreme, especially in cases where the system maker isn't also a content provider, IHS iSuppli said. That means Amazon is more insulated, and it also will benefit from its Kindle Fire tablet.
Meanwhile, the firm said, the market for e-book readers remains strong in Eastern Europe and Russia, and a potential opportunity exists in Africa and India.