If in doubt, sell to the business user

8 September 2008

Readers of Robert Scoble's blog will probably be wondering why there are two plastic electronics companies unveiling stuff at the Demofall08 conference this week. Despite visiting their website to have a bitch about it, Scoble somehow thought Plastic Logic was actually called Plastic Electronics. Then he wondered what plastic electronics was all about. Well, the clue's in the name. At least what Scoble thought was the company's name.

Making ebook readers has been Hermann Hauser's dream ever since he departed Acorn some 20 years ago and before he headed into venture capital. The Active Book Company then had to make do with the ropey battery life and bulky electronics of 1990s chips and LCDs. As a lead investor in Plastic Logic, the situation looks a lot better for his dream of a mass-market ebook reader. The eInk-based display is bistable, so there's no need to keep powering it to display an image. Up to a point - until the tiny black and white pellets get jiggled around too much - whatever you program the display to show will stay there. And the company is readying a plant in Dresden for volume production of the thin display modules.

There's only one teensy-weensy problem: Amazon, Sony and a few others got there first. The Amazon Kindle has demonstrated that there is a pent-up demand for e-readers. For its part, Sony will probably demonstrate the limits of that demand by by forcing users to buy and store ebooks in proprietary, non-portable (in an IT sense) formats. I know the Kindle enforces worse limitations right now, but Sony has bags of form in the lock-in business.

Plastic Logic's major claim to fame, according to what it plans to show at Demofall08, is that it has a bigger screen. Do you need an ebook reader with a bigger screen than a Kindle? Probably not. Does the world need another brand of ebook reader right now? Probably not. Which is largely why Plastic Logic has aimed at the "business user" with its device, which is meant to ship next year.

The good old business user. They'll buy just about anything won't they? I mean, once you've packed the laptop, the phone, the personal phone and several different chargers, who's going to quibble about lugging another couple of kilos around for a black-and-off-white electronic display? OK, your chiropractor might.

Giving the reader the ability to display Excel and Word files is sensible. But as a business tool, it's only really going to fly if you can edit those files as easily as you can on a laptop. Otherwise, the size of the screen may well be a handicap when competing against products already on the market.

It's worth looking at what has happened with another company that started off marketing to business users: Netherlands-based iRex. The Iliad was originally sold as a way of delivering stuff like financial reports to businesspeople on the move. However, the company widened its scope to cover the consumer ebook business. It was one of the few options for many European ebook fans ahead of Sony's launch here. I'm checking in with the company about the split between these two businesses, but it's clear that iRex has been ramping up the consumer side recently.

The problem for Plastic Logic is that what it's demonstrating today has the potential to be an important type of product. It is after all what Mike Arrington wanted: once it becomes possible to manufacture in large quantities a full-colour display able to handle video that has the low-power characteristics of eInk.

The eInk-based display is some way off that target. LG Display and Polymer Vision have developed independently experimental full-colour plastic-electronic screens. LG had to use colour enhancement - cheating through Photoshop-style effects - to get a reasonable colour image as the contrast with eInk and colour filters is not all that great. That will have to change for anything to challenge even low-end LCDs in visual appeal. Although LG may surprise us here, you're basically looking at a wait of three to five years before you can expect to get a decent, low-power flexible colour display.

Once it happens, you will be able to kiss goodbye to the clamshell laptop: just take a keyboard armed with some kind of low-power Bluetooth and you have your office on the move. But don't hold your breath waiting for it to happen.

How Plastic Logic intends to make money in the meantime remains something of a mystery to me unless it can find a way to break into the larger market for consumer ebooks. That means finding a way to make the displays much cheaper. Sony's ereader is still way too expensive for mass-market appeal. These things have to be sub-$100, and that's with five free books, before they will really fly. But it is a situation where vertical integration may help to reduce costs. Which is the one thing that Plastic Logic has in its favour. However, the likes of Polymer Vision, with the rollaway Readius may get there first.


There are two much-vaunted reasons as to why the iPod was successful: (i) KISS & Cool approach to UI design (ii) the enablement of easy distribution of music with the integration of iTunes (and other less legal means).

A reader is a way to access content, and as with games consoles, websites, news papers...it will be access to content that will determine the winner in this domain. Amazon has wonderful access to readable content (Sony, not so much) with a means of negotiating "interesting" terms leveraged across its product offering. This is the defensible advantage Amazon enjoys.

If there were an easy way to "rip" a book as you would a CD, the situation could be different.

Although not ideal (OCR needs to be done), maybe this is where a good partnership could start: http://books.google.com/

James, agreed.

Lack of ready access to ebooks is probably one reason why Plastic Logic has gone for the business market. But it makes me wonder whether the company should have tried harder to seal deals with people who do have that access or can subsidise an e-reader in the manner of Amazon. It is, however, possible that Plastic Logic aims to do that once it has product on the market and is in a position to ship in volume.