IHS: Tablets have made e-readers an 'endangered species'

E-book readers are all but extinct thanks to tablets, according to industry analysts. But should we count them out altogether yet?

Even though e-book readers have only been on the market for a few years now, it looks like their time might already be up soon.

According to the recent IHS iSuppli Consumer Electronics Special Report, annual e-reader shipments peaked in 2011 with 23.2 million units. But shipments for 2012 are expected to drop by 36 percent to 14.9 million units.

By 2016, IHS analysts project that e-reader shipments will drop to just 7.1 million units, which researchers described as "equivalent to a loss of more than two-thirds of its peak volume in 2011."

Jordan Selburn, a senior principal analyst covering consumer platforms at IHS, suggested in the report that rapid growth and "immediate collapse" of the e-reader market is actually unusual for consumer electronics.

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. And while other uni-tasking devices—like digital still cameras, GPS systems and MP3 players—also face similar pressures and battle dim prospects ahead, all have had a longer time in the sun than ebook readers, demonstrating even more painfully the depth of the ebook reader’s fall.

It's arguable that industry analysts are getting a bit dramatic by going so far as to say that "tablets make e-book readers an endangered species."

Nevertheless, it is obvious to most tech industry followers that fully-fledged tablets with color touchscreens and more functionality is where the mobile market is headed.

E-readers might still have a place in the mobile space -- albeit a much smaller customer base -- for a few reasons.

For one, e-book readers are getting incredibly cheaper by the year. IHS researchers acknowledged in the report that e-readers are doing better in Eastern Europe and Russia, with growing potential in developing markets in India and Africa.

Furthermore, even though tablets are becoming thinner and lighter with each generation of devices, e-readers are so portable that they can be chucked into nearly any bag without much thought. They're also a lot more friendly for outdoor reading at places like the beach or the park.

Thus, an "endangered species" label for e-book readers might be over the top. It would probably be fairer to say that the e-book reader category is going to become an even more niche market than it already is.