Monday, May 5, 2008

Patience's virtue: E Ink plots out post-Amazon Kindle plans

By Efrain Viscarolasaga

After 10 years of product development and more than $150 million in private funding, electronic paper maker E Ink Corp. has been the subject of a lot of hype and a lot of expectations. Last fall, the company reached a pinnacle in public exposure as the driving technology behind Amazon.com Inc.'s e-reader, the Kindle.

Now it's focusing on its post-Kindle strategy -- and its first steppingstone is a new chip it is launching with Seiko Epson Corp. that makes the company's screens update faster, opening the door to more applications for E Ink's digital paper technology.

The announcement was made with considerably less fanfare than previous e-reader-related announcements, but in many ways, it's one of the biggest steps the Cambridge-based company has taken -- it moves E Ink that much closer to its Holy Grail: mass-market adoption.

"For years, we had limited resources and were aiming at the Kindle, the Sony Reader and similar products," said E Ink vice president of marketing Sriram Peruvemba."But now that those are done, we are ready to get into new products."

The new chip allows developers to create more interactive products and, ultimately, more potential customers, according to Peruvemba. E Ink has already dabbled in a number of such applications -- watches, cell phones, point-of-sale displays and "smart" credit cards ­-- but its new product is a step forward in spurring the imagination of even more product developers.

"The technology is there," Peruvemba said. "We're just waiting for the developers and other components to catch up."

If you believe the analysts, E Ink may not have to wait much longer.

The Kindle, as well as other consumer products that use low-power display technologies -- called electrophoretic displays -- have educated the consumer market, paving the way for faster adoption. Flexible displays and signage alone is expected to be a $2.8 billion industry by 2013, up from $80 million in 2007, according to a recent report from Jennifer Colegrove, a senior analyst for display technologies at iSuppli Corp. in California.

Investors have remained patient with the company, filling its coffers as recently as last September, betting that the technology is more than just a component of e-readers.

"Yes, there has been a lot of investment in the company, but how much was invested in LCD (liquid crystal display) or plasma before they became billion-dollar industries?" said Thom Holder, an investment director at Intel Capital, and investor in E Ink since 2004. "People underestimate that in the display industry, it takes years to build out the ecosystem for new technologies and multiple platforms."

E Ink's investment base is also heavy on strategic investors, including Intel, Motorola Corp. and Hearst Interactive Media, among others.

While those relationships provide financial support, they also offer outlets for the technology.

"We come at (the investment in E Ink) from a strategic intent, as well as a financial intent," said Holder, adding that E Ink's low-power displays fit nicely with Intel's ongoing mission to advance low-power processing in all applications.

Still, E Ink faces challenges. According to Colegrove, keeping the price of such electrophoretic products down has been difficult -- the Kindle and Sony e-readers retail for hundreds of dollars, for example. And new features, such as color capabilities (E Ink officials expect to have commercial-ready color products by 2009), may keep those prices up in the near term. But eventually, prices will come down across the low-power display market, much as they did with LCD and plasma technologies in past decades, said Colegrove.

There is also some competition from firms like SiPix Imaging Inc. in California and Plastic Logic Ltd. in England. While both firms are working on flexible displays using electrophoretics, neither has established an investment base or launched high-profile projects such as the Kindle. Both may be able to take a piece of the market, but according to Colegrove, E Ink sits in the driver's seat of the industry.