The heart of a reader
The Kindle 2's success may lead to growth for E Ink, but the Cambridge company must contend with rivals nipping at its heels
CAMBRIDGE - Russ Wilcox can sound messianic when talking about his company's electronic paper display technology as an antidote to the culture of texting, Twitter, and short attention spans.
"We want to keep the idea of deep thinking alive," insisted Wilcox, 41, chief executive at E Ink Corp. "We're trying to save the novel. We're trying to save publishing. We're trying to save civilization."
The company has been riding high since February, when Amazon.com released the Kindle 2 digital book reader, which features E Ink's high-resolution displays, to much critical acclaim. Amazon is projected to sell more than 1 million readers in 2009, double the estimated 500,000 original Kindle devices it sold last year, according to Citigroup Investment Research.
That would position the Kindle 2 - and, with it, E Ink - as leaders in a hot emerging market that may transform how people read novels, textbooks, and even newspapers. (The Globe is among the publications that have versions formatted for the Kindle 2.)
Analysts are monitoring the demand for signs that e-book readers are approaching a "tipping point," similar to the ones that earlier propelled e-mail devices like the BlackBerry and music devices like the iPod into the mass market. "Amazon sold more units of the Kindle than were sold by the iPod in its first year," said Mark H. Mahaney, an Internet analyst at Citigroup's research unit.
E Ink, started in 1997 by Wilcox and four co-founders, has raised more than $150 million in venture capital and undergone several changes in its business plan. Three of the original co-founders have since left the business; the fourth, Dr. Joseph Jacobson at the MIT Media Lab, invented the technology and now sits on the company's Board of Directors.
With the success of the Kindle 2, the outlook for its low-power, high-contrast screens, and for the e-reading phenomenon, could put it in a growth mode that's unusual for any business in an economic downturn.
Still, its managers remain cautious. In the current environment, where sales projections can be tenuous at best, "the trick is to grow the company without adding heads," said Wilcox, who has been hiring small numbers of workers this year.
The company now employs about 130 people. That includes 120 at its headquarters near Fresh Pond, where they make the electronic ink, tiny capsules of positively charged white particles and negatively charged black particles. Most of the rest work at a recently opened plant in South Hadley that handles coating and film production.
E Ink also contracts out some work for the Asian Pacific market to a plant in Japan operated by its partner, Toppan Printing Co.
Wilcox believes the success of the Kindle 2, and other devices such as the Sony PRS-700, which also uses E Ink, have put e-reading devices on track to be embraced by a broad market. Their adoption rate could accelerate when E Ink introduces color display technology next year. The company is expected to demonstrate its color e-paper in June at the Society of Information Display trade show in San Antonio.
Not all industry watchers are convinced the Kindle is poised for takeoff.
"Certainly the new edition of the Kindle is a very attractive, functional device," said Bill Trippe, senior analyst at the Gilbane Group consulting firm in Cambridge. "But there's still well under 1 million Kindles out there, and that's short of a mass market."
Trippe said the Kindle could face competition not only from Sony but from mobile devices like the iTouch, and from netbooks and laptops that employ liquid crystal display technology rather than E Ink on their screens. He suggested that it's far too early to predict which e-reading platform will attain critical mass - or when. "I really like the E Ink technology," Trippe said. "But the Kindle, because it's expressly tethered to Amazon.com, has its limitations."
Garth Conboy, president of eBook Technologies Inc., a La Jolla, Calif., company that makes software enabling digital book readers to deliver content electronically, agreed the market is young. "There will be other entries and other players working on larger devices," Conboy said. "Amazon has got the lead for now, but I don't think the Kindle will become the iPod of the e-book space."
One competitor, Japan's Fujitsu, licenses LCD technology from Kent Displays Inc. of Kent, Ohio, a company that specialized in LCD signage, for a line of color e-readers it launched in Japan in 2007. Those devices are scheduled to begin shipping to the US market this spring and could pose a competitive challenge to the Kindle and E Ink.
"E Ink has a very good technology," said Albert M. Green, chief executive of Kent Displays. "Hats off to them down the road. But our technology can compete with E Ink technology for the e-reader. And our advance is in color; theirs is in black and white."
Wilcox, for his part, recognizes that fortunes can change quickly in the high-tech industry and no one can sit on a lead.
In describing E Ink's standing, Wilcox, like many in the hardball hub of Boston, reaches for a baseball metaphor. "We're in the lead, but we're in the lead in the second inning of a ballgame," he said. "All that means is we have a target on our back."
Robert Weisman can be reached at firstname.lastname@example.org.