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Upside for Ad-Supported e-Reader Future Sales


Some people believe that multifaceted media tablets are a more desirable choice than single-purpose e-readers. That said, the U.S. installed base of e-reader devices has more than quadrupled since 2009 and demand remains strong.

eMarketer now estimates more than 20 million e-readers will be in use by the end of 2011 -- reaching 8.7 percent of the U.S. adult population. By 2012, 12 percent of adults will have a Kindle, Sony Reader, NOOK or similar portable e-reader device.

"Two recent developments illustrate the broad reach of e-readers," said eMarketer senior analyst Paul Verna.

First, the Amazon announcement that its lowest-priced Kindle is its best-selling product supports the view that their customers are eager for affordable, no-frills mobile devices that easily enable e-book purchase and consumption.

Second, Liberty Media's $1 billion offer for Barnes & Noble was predicated largely on the book retailer's success with the NOOK Color -- whose list price is nearly double that of the ad-supported Kindle.

eMarketer therefore believes that the upside for product sales at both ends of the e-reader price spectrum bode well for continued adoption of this device category.

Moreover, eMarketer's estimates of e-reader penetration are based on a meta-analysis of several data sources. The penetration figures assume no sharing of devices; where each e-reader corresponds to a single user.

However, many e-reader users indicate that they do share their device. Nielsen reported last year that about a third of e-reader owners share with at least one other person -- meaning they're likely used by millions more people than the reported 12.7 million unit installed base.

Advertising opportunities with e-readers have been limited in the past, but the spring 2011 introduction of the Kindle with "Special Offers" brought the first ad-supported e-reader to market.

"Brand marketers seeking to reach book enthusiasts have a new medium at their disposal with the ad-supported Kindle," said Verna. "Naturally, marketers will want to avoid disrupting the reading experience, but ads on the Kindle screen saver and homepage appear to be hitting the spot where the interests of advertisers, publishers, device-makers and consumers converge."

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