Tech Czar at AU Optronics Talks E-reader Features

Excitement about e-readers has grown all year as people learn to love devices such as the Amazon Kindle and Sony Reader Digital Book. Some market researchers even say e-readers will be the hottest gift idea this holiday season.

There are several trends in the e-reader industry, however, that suggest waiting until next year to buy a device could be a good idea. One neat feature coming soon is the ability to use a stylus to take notes on an e-reader screen, said C.T. Liu, chief technology officer of Taiwan's AU Optronics, one of the biggest LCD screen makers in the world. He also recently became chairman of SiPix Imaging through an investment by AU. The Fremont, California, company develops e-reader and ink technology different from that from E-ink Corporation used in Kindles.

Liu sat down with IDG News Service (IDGNS) to discuss the direction of the e-reader market and what new products might be on the market over the next year. The following is an edited transcript of the interview.

IDGNS: What kinds of new e-readers will people see coming out soon, and what kinds of functions can we look forward to?

Liu: We think the pocket-sized devices people are talking about look exciting, devices with 4.3-inch to 5-inch screens. The exciting part is the writing function. You can use a smaller screen to read e-books, but you can also use it to take notes.

IDGNS: How long will those screens last? If you're writing on them a lot, will they need to be replaced quickly?

Liu: You will be able to write and rewrite over 10,000 times on one screen, you don't have to worry about that. It will last forever. We have machines that do nothing but tap on a screen thousands of times to determine wear and tear. We do a lot of development in this area.

IDGNS: We've heard a lot about prices for e-readers coming down. When will that happen in a big way?

Liu: Well, let's take the 6-inch e-reader, the standard size. I think everyone is trying to make a cheap device in this category and push the price down to around US$150 next year. Right now the lowest price is $199 on a Sony e-reader. Now everyone is shooting for the next move, to cut about $50 off that price. The year after next, 2011, maybe we'll get to $100. But if a lot of people buy e-readers and production volumes go up quickly, then price declines may accelerate.

IDGNS: Most e-readers are 6-inch to 9-inch now, what other sizes will we see soon?

Liu: Well, we divide the market into three segments. First is the conventional 6-inch and 9-inch screens. Then second, there's the 10-inch and above, for e-magazines, e-newspapers and digital business documents. Finally, there's a third: pocket-sized e-readers people are talking a lot about now. The pocket-sized devices will have 4.3-inch to 5-inch sized screens

IDGNS: When will we see devices that combine e-reader screens and regular LCD screens? People already carry around a lot of devices today, a smartphone, laptop, digital camera, music player; to add an e-reader to that is a lot.

Liu: Mobile devices like smartphones and notebook PCs are good for browsing the Internet or reading a short paper, but these devices are not good for larger volume reading and it's not good for any kind of continuous reading, 2 to 3 hours. For books, magazines, business documents, anything you need to spend more time reading, you need an e-reader screen, and you need big screens. It's uncomfortable to your eyes to read on a computer screen for large amounts of time.

With LCD screens there are two fundamental problems. It is a self-illuminating device, so when you look at it, your eyes get tired. E-paper is like paper, it uses natural light from your environment. Your eyes don't get tired when you read e-paper. The second issue with LCD is power consumption. You have to refresh at least 10 times a second and with even that, you consume a lot of power. With e-paper, the only time you consume power is when you change the image. You could keep one image on your e-reader for a week and not lose power.

IDGNS: Earlier this year AU Optronics bought about a 30 percent stake in SiPix Imaging. Why are you so excited about e-paper and e-readers?

Liu: I think we strongly believe e-paper creates a lot of new market momentum. We don't just talk about penetration rates or replacement, it's a completely new market. The growth could be 200 percent, 300 percent, it's not just 20 percent or 30 percent, in terms of market demand. I think that's why we're so excited about e-paper.

AU started working with SiPix in April. We completed some system work in June and started mass production of e-tags for store shelves. The second product we put out was hard drive labels, so you can see what their content is. This month, we started shipping 6-inch and 9-inch e-reader display modules, though SiPix already had some products in production before we started working with them.

IDGNS: Is the e-tag market growing fast?

Liu: E-tags is a huge market. A huge store like Costco will need a lot of e-tags on shelves to show product prices. There is also e-signage and dynamic commercial displays. E-paper is going to change our lifestyles and change the entire market. E-tags in supermarkets will completely change the market structure. The entire computer system, how to update product prices and the total security system, that whole system will create a huge market.

From a cost perspective it already makes sense for, say, Wal-Mart to change to e-tags, but there is an investment threshold. Most supermarkets want to know exactly how much their return on investment is going to be this year, as well as over the life of the system. But the return this year is important because the initial investment is going to be huge. The costs already make sense, though.

But the impact of e-readers will be ten times bigger on the book and publishing market.

E-books/readers are going to be about 55 percent of the overall e-paper market, while e-tags, e-signage, medical applications and other kinds of uses will make up the rest.

IDGNS: Are schools asking for e-readers?

Liu: The education system is one potential market, but it doesn't have a lot of momentum yet. The schools, safety regulations... It's a collective decision, it's not an individual decision. Over the next few years we don't think schools will buy in big volumes yet. It's more consumers and businesses.

IDGNS: When will we see an AU Optronics or SiPix branded e-reader?

Liu: There will never be an AU branded e-reader, nor a SiPix brand. We provide these products to our customers and we don't want to compete with our customers.

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