Kindle kindles a ray of hope for domestic companies

By Wang Xing (China Daily)
Updated: 2009-09-11 14:02

Kindle kindles a ray of hope for domestic companies
Hanwang Technology has sold more than 200,000 e-book readers since last year. [China Daily/Zhang Bin]

The international success of Amazon's e-book reader Kindle is prompting Chinese companies to create their own versions for the domestic market.

Liu Xin, vice-president of Datang Telecom, one of the biggest technology businesses in China's home-grown third generation (3G) wireless service standard TD-SCDMA, said the company plans to release a new e-reader this month that supports high-speed connections for downloading and updating reading material.

The device, which supports both TD-SCDMA and GSM networks, will be sold for around 3,000 to 4,000 yuan, according to the company. The product will be available not only from China Mobile's self-owned and partner retail outlets but also from 3C department stores.

"I think the e-book reader will become one of the most important products in China as the country embraces the 3G era," said Liu. He said the company was now working on a color display model, which is expected to be released in 2011.

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According to research firm DisplaySearch, China's e-reader sales are expected to grow about 800,000 this year to around 3 million in 2010, making up 20 percent of the world's total. Jennifer Colegrove, an analyst from DisplaySearch, expected China's e-book reader market to surpass that of the United States before 2015, according to Forbes.com.

Liu Yingjian, chairman of Hanwang Technology, said the e-book reader market is expected to see explosive growth in China over the next few years as Chinese telecom carriers launched their 3G services.

He expects sales of his firm's e-book products to reach 500,000 customers in China this year.

"Sales of Hanwang e-book readers have outpaced the combined revenue of all our other products since we launched them last year," said Liu, founder and chairman of Hanwang, China's largest handwriting-input recognition company. "Because of the e-book readers' robust performance, we expect to double our revenue and profit this year."

Hanwang launched its e-book reader last year. It sold more than 200,000 of them in China. Liu said Hanwang's e-book reader uses the same electronic paper display as Amazon's Kindle and enables users to mark the pages using Hanwang's handwriting recognition technology.

According to research by China Book Business Report and the domestic e-paper technology firm Sursen, China had 79 million e-book readers at the end of last year that sustained a 226.3 million yuan market.

Although some 85 percent of e-book users read books on their personal computers, revenue of the mobile e-book market surged 366 percent to 30.3 million yuan in 2008.

"China's e-book market is going to take off as consumers get used to mobile reading," said Guan Dai, an analyst from research firm Instat. She expects the market to have explosive growth in the next four to five years when Chinese telecom operators finish deployment of their 3G networks and start pushing the service.

Domestic companies such as eREAD Technology Ltd and Tianjin Jinke Electronics released e-books in China many years ago, but the market did not boom until recently as readers' preference for printed books began to wane.

Kindle delivers a vast online library of more than 270,000 books - including 104 of the 112 New York Times best sellers - to end users wirelessly. Amazon registered a 24 percent increase in net income in the first quarter of this year.

The huge market opportunity has attracted most of the world's major IT companies to release e-book products, including Sony, Apple - which released Kindle applications for its iPod and iPhone users - and Samsung.

However, according to experts, rampant online book piracy and the lack of a centralized source for content are the major obstacles for the development of e-book readers in China.

Guan from Instat said it is not easy to copy Amazon's success in China as few Chinese e-book makers have an online business equivalent to that of Amazon. And piracy in China is a drag on consumer willingness to pay for e-books.

She said only telecom operators have the capacity to deal with piracy in China as they have the ability to make e-books available to the masses at an affordable price. "As Chinese carriers decide to push e-books after they finish rolling out their 3G networks, the market will see a rapid boost," she said.

This year, Chinese telecom operators began to aggressively expand their 3G networks. They allow faster data transmission speeds.

China Mobile chairman Wang Jianzhou recently said the company planned to team up with Taiwan technology giant Foxconn Electronics for the production of Kindle-like e-readers, which Wang said could be launched as early as the first half of next year.

China Unicom, which recently announced it was introducing Apple's popular iPhone to China in the fourth quarter, also said it plans to launch an e-book service.

Telecom carriers hope the new service could help them balance the declining revenue from traditional voice services.

Liu Xin from Datang Telecom said China's e-book reader market is currently in its very early stages of development. He said Datang Telcom welcomed new comers. "The market will only take off when big companies take part in the competition," he said.