Prime View and E-Book Readers:A New Page in Reading History

The intimidating and awesome shelves of books in libraries have disappeared, leaving behind only an information desk and a computer center. Students are relieved of their heavy bookbags, and when their eyes tire of reading they just listen instead. Bookshelves in the studies and dens of private homes are no longer dust traps, and homeowners devote their attention to creating a reading space of maximum comfort. Bibliophiles no longer need to turn their collections upside down and pore over countless pages to find the information they are looking for-all they need to do is press a few keys. Long-distance travelers have gained more than anyone: gone forever are worries about being bored on their journeys! This beautiful new reading world may be an integral part of our reality sooner than you think.

In fact, there is nothing novel about the idea of using portable electronic devices to download information. As we have moved toward the ideal of "ubiquitous computing" in recent years, companies producing notebook computers, PDAs, and mobile phones have rushed in. It's just that each of these mediums is limited by the nature of the product itself, so none of them really give people the right feeling for reading. It was only when the Sony Reader and Amazon Kindle, made specifically for book-lovers, came onto the market that the future outlook for e-books began to take more definite shape.

On average, each person consumes 194 kilograms of paper per year, equivalent to cutting down 16 trees. Use of e-paper can help reduce excessive cutting of forests, thereby slowing soil erosion and global warming.

Electronic ink on plastic paper

"The original goal in developing e-books was to make the feeling as similar as possible to reading a printed book," explains Prime View's chairman Scott Liu. The liquid crystal display (LCD) screens used in ordinary notebook computers are hard to read when there is too little light or, conversely, in intense sunlight; if the angle is not just right, the letters and images become distorted; and if you are careless enough to drop yours, a fractured screen will certainly lead to a broken heart. These flaws can be overcome with e-paper, so it is no wonder that these soft displays are seen as the window into the soul of the information industry of the future.

The e-paper produced by Prime View is a kind of "electrophoretic display" (EPD). This is a technology developed in the 1990s by Joseph Jacobson, a professor at the Massachusetts Institute of Technology. The invention led to the creation of the company "E Ink."

Unlike mainstream TFT-LCD screens whose main components are glass substrates, liquid crystal, and backlight modules, EPDs are made from soft plastic sheets covered with miniscule capsule-like balls known as electronic ink (e-ink). Inside the capsules are positively charged white particles and negatively charged black particles. When these particles are exposed to stimuli from different electrical fields, different aggregate shapes are produced, displaying a white or black effect. (It is possible that black and white particles could be altered into other hues, but the technology for this is not yet ripe.)

Because the substrate is made of a soft plastic sheet, EPDs are true to the name "e-paper." EPDs are not only as light and thin as paper, they are flexible for easy carrying.

Besides e-paper, Prime View's strategy is to focus on niche products. The thin-film transistor liquid crystal displays (TFT-LCDs) that Prime View produces are used for instrument readings in aircraft and ships, as well for television camera monitors.

Easy on the batteries

EPDs are reflective information displays, just like ordinary paper, and therefore do not emit any light of their own. Since they need no mechanism for luminescence and don't use backlighting, they not only save lots of electricity, the image will not flicker, so bibliophiles who can't keep a book out of their hands can stare at an EPD for hours on end without their eyes getting any more tired than in normal reading. You can read so long as there is any kind of light source, and you can see the print clearly even under strong sunlight.

Moreover, just as print ink can last for years and years without fading, another major advantage of EPDs is that they are "bistable."

The term "bistable" means that, unless some specific signal is given, the particles will remain in their original state. In other words, e-paper uses no power in the static mode, and power is only used when the page is changed (like turning a page in a printed book). Because EPDs use power so sparingly, it is possible to flip through 7000 or 8000 pages for each recharge. So even if you are traveling, never fear that your book will run out of batteries just before the surprise ending is revealed!

According to the market research firm In-Stat, by 2013 global output of e-book readers will reach 30 million units. Of the new e-book display devices, the Amazon Kindle and Sony Reader currently have the largest market shares.

Virtual book megastores

In fact, e-books are not some miraculous new product, and appeared at the Tokyo International Book Fair as early as the mid-1980s. The e-book readers touted by Japanese manufacturers back then were similar in design to PDAs. The black-and-white liquid crystal screens were quite primitive, and they were not popular with consumers.

In the early 1990s, the two global colossi of the information industry, Microsoft and Intel, linked hands to develop multi-media computers, and then began to cooperate with heavyweight publishing houses like Dorling-Kindersley of the UK and Random House of the US to develop educational DVDs. Taiwanese publishing houses like Yuan-Liou and Kuang Fu (Anson) followed suit. Around that time Chu Bong-foo, known as "the father of Chinese language computing," also came out with Easyread e-books, the subject of much discussion at the time.

Unexpectedly, however, the rise of the Internet in the late 1990s sparked a wildfire of enthusiasm for creating websites and webpages, and Netizens around the world proved delighted to share information for free. This short-circuited the once promising outlook for DVD books.

The convenience of the Internet and the rise of information sharing robbed DVD books of their competitive edge, but major electronics companies continued to be interested in developing e-book displays. Sony carried on with its e-reader, Panasonic came out with full-color e-books, and even Taiwan's Kolin put out an "i-library" capable of holding 500 books. But these still used backlit displays, so they were not suitable for long periods of reading, and sales failed to meet expectations.

The new generation of EPD e-books, which are selling well, not only offer the specs we have so far discussed-they are light, consume little power, are durable and shock resistant, and are easy to carry-they offer other features as well. For example, the Amazon Kindle comes with an in-built wireless communications system directly linked to Amazon's online bookstore, dispensing with the limitations imposed by Internet cables or WiFi hot points. Moreover, there are no fees for use of the wireless system or for transmission, and it usually takes less than a minute to download a book. Those with an insatiable craving for new books can carry a whole bookstore around with them.

According to the market research firm In-Stat, by 2013 global output of e-book readers will reach 30 million units. Of the new e-book display devices, the Amazon Kindle and Sony Reader currently have the largest market shares.

Better than a bookstore!

Of course, like paper, an e-book reader is just a conveyance. It is the content that will really attract consumers.

In recent years, governments in many countries have been promoting digital archives, storing vast numbers of books and documents as electronic files, providing a core source of content for e-readers. In addition, there are more and more flexible forms of assignment and licensing of intellectual property rights: for instance, Apple has reached agreements with music publishers and creators to make their music available, for a fee, for the iPod. When Amazon's Kindle 2 came out, horror novelist Stephen King announced that his new novel Ur would not have printed or Internet versions, but would be available exclusively through Kindle. This aroused much curiosity in the publishing industry, not to mention prompting every King fan to mull over the purchase of a Kindle.

Amazon, which began digital storage six years ago, already has 245,000 books available for download. Moreover, twelve major international periodical publishers, including those who put out the New York Times, Washington Post, Wall Street Journal, and Le Monde, have agreed to join. Recently Amazon also began selling a larger screen version of the Kindle called the "DX," which is considered an "electronic newspaper," making newspaper reading much more convenient, and offering new hope for the revival of the fading print-news industry.

Sony, the other major player in the e-book game, so far only has an archive of 100,000 volumes. But it has been working with Google to allow people to use the Sony reader to download from among the 500,000 public domain books (those without copyrights or patents) that the search engine can access.

Prime View believes that current e-book technology is still at the level of "elementary school graduate" and that there is much room for further progress. New developments can be expected in such areas as touch screens, Bluetooth, and wireless Internet connections.

Re-papering

The convenience of reading devices and the richness of content have created the conditions for today's e-book sales boom. Of course, none of this would have been possible without the invention of e-ink. Scott Liu suggests that the status of the E Ink company in the e-book world is similar to that of Intel in the computer field.

Nonetheless, e-ink alone is useless "unless you have a screen that can display it." Liu notes that after E Ink was founded in 1997, it worked with Philips and several other firms, but mass production of a screen never got under way. Having sensed the potential of e-paper, Liu acquired Philips' e-paper division four years ago (despite general advice to the contrary!). With very close cooperation from E Ink, they successfully developed a plastic substrate that would work with electronic ink, and in this way became the sole provider of EPDs to the world.

Looking back, the linking up of Prime View and E Ink was as if destined, a match made in heaven.

Sixteen years ago, Taiwan's paper powerhouse Yuen Foong Yu Paper Manufacturing Co., taking note of the rise of LCD screens as an alternative form of information conveyance, decided to create Prime View, becoming pioneers in the TFT-LCD manufacturing business in Taiwan. But Prime View, which had never had more than a single generation-2.5 plant, found it difficult to compete in the environment of high-volume low-price OEM production, and suffered losses for 11 straight years.

Scott Liu, who is concurrently the vice-president of the Yuen Foong Yu Group as well as being Prime View's chairman, started out by founding his own computer company in the US. Ten years ago, he accepted an invitation from Ho Shou-chuan, president of the Yuen Foong Yu Group, to reorganize Prime View.

He discovered that Prime View at that time had the smallest production capacity of any TFT maker in Taiwan, putting it at a competitive disadvantage. Moreover, the economy in its sole market, Japan, was softening, squeezing the company even further. Liu therefore addressed himself to marketing strategy, diversifying to Korea, Taiwan, and mainland China. Then, two years later, the firm stole a march on competitors with its portable DVD player, and revenues increased more than ten times over.

Even after disconnecting the battery, e-paper can hold an image for at least two months.

Niche markets

All good things must come to an end, and although Prime View led the way in development of a seven-inch screen, other firms were already circling for their bite of this profitable market. Prime View, unable to compete at the low profit margins that larger firms could tolerate, was back in the soup. Liu, after assessing the situation, decided that his firm's strengths-flexibility rather than scale, cutting-edge technology, and skill at low-volume high-diversity manufacturing-made it far more suitable for "niche markets" than for the shark-infested mass markets.

"Because our plant is small, technology can be taken straight from the lab to the production line for trials or even mass production, with little risk and not much pressure in terms of costs," Liu explains. Although there is little volume to niche markets, and you have to invest a lot in R&D and human resources, once you get through the test phase and become the supplier, you cannot easily be replaced, and you are insulated from shifts in supply and demand and less susceptible to fallout from overall economic trends.

Prime View thus decided to target niche markets for things like screens for airplane cockpits, submarine and ship bridges, and automobile dashboards; monitors for television cameras; and similarly specialized LCDs. Such products have to have high stability and reliability; be resistant to extreme temperatures, pressures, and water; and not reflect light. Specifications for such products are very rigorous, and the unit cost (and price) is correspondingly high. Last year e-paper made by Prime View even went into space with mainland China's Shenzhou 7 rocket, testifying to the superior quality of their work.

Under its current strategy, Prime View's products are divided into three categories: consumer electronics, the cell phone market, and niche markets. Since the company moved into the EPD field with the acquisition of Philips' e-paper division in 2005, and mass production smoothly commenced in 2006, the importance of the "niche market" category as a proportion of the whole has steadily increased.

At the end of 2007, Kindle made its sensational debut, sending Prime View's revenues for that year to NT$11.6 billion, with a profit margin of nearly 21%. Profits increased more than five-fold over the previous year.

As the market for e-books heated up, it became obvious to all that production capacity at Prime View-whose single plant had to provide more than 90% of all EPDs sold to nearly 20 e-book firms large and small around the world-was inadequate. For this reason, in 2007 Liu acquired the Korean company Hydis, taking over its three plants (one each of generations 2.5, 3, and 3.5), thereby increasing production capacity by a factor of four and in a single bound turning his firm into Taiwan's largest maker of mid- and small-sized screens.

Unfortunately, just after Prime View took Hydis over, the global economy went into deep freeze as a result of the financial tsunami. Although core operations still turned a profit, there was a huge loss for 2008 as a whole. Yet Scott Liu remains optimistic. He notes that Hydis has its own unique AFFS technology, allowing LCD screens to be clearly visible even in sunlight, which is very useful for many high-profit-margin products like those used in cars and aircraft. Moreover, after retooling, in March 2009 part of Hydis' production capacity began turning out EPD e-paper. With formerly idle production capacity steadily getting moving, expectations are high for future profitability.

E-paper can be rolled up without cracking. Is this the way most of us will read in the future?

Don't judge a book by its cover

As environmental needs like saving energy, reducing power use, and lowering carbon emissions grow in importance, EPD e-books will also become more popular. But many consumers are still unfamiliar with the many advantages of e-books.

"I think that the government should right now be guiding domestic industry into the field of e-book readers." As Liu has observed, several years ago mainland China, when weighing options for reducing the educational gap between country and city, was even then seriously looking at e-books. In the US and Europe, many university students are already using e-books instead of textbooks. If the government would provide encouragement, Taiwan's e-reader-related industries could, when the time comes, really take off.

Right now the standard size for e-reader screens is six inches, about the same size as a printed book. Although Prime View also has 8.1-inch and 4096-hue color screens ready for the market, and there is also the recently introduced 9.7-inch Kindle DX from Amazon, Liu feels that until foldable or rollable products hit the market, six inches will be "the outer limit." Larger screens are inconvenient to carry around; readers much prefer something they can slip into a jacket pocket or purse.

Looking to the future, we can expect the industry to overcome the main technological bottlenecks such as full color display, rolling or folding, touch-sensitive controls, and the use of electronic pens to make notes. Moreover, if production can eventually be done in the "roll-to-roll" format like mass printing is, "the scope of application of soft displays will become wider and wider!"

Liu says that besides e-book readers, stellar products of the future will include things as small as wristwatches, electronic labels in supermarkets, and mood rings (that show different images depending upon the mood of the wearer), to things as large as ambience wallpaper and advertising billboards.

Paper tigers

The prospects look great for e-paper displays. It is estimated that the market will grow explosively from US$260 million in 2010 to US$2.1 billion in 2015. Naturally a lot of screen manufacturers are looking to get a piece of the action.

Besides LG and Samsung of Korea, Japan's Fujitsu is developing full-color e-paper technology. Meanwhile, Delta Electronics of Taiwan last year announced that, in cooperation with the major tire manufacturer Bridgestone of Japan, it would also enter the e-paper market with "liquid powder display" technology. And Qisda (part of the BenQ Group, the leader of the screen-making pack) announced that it would invest in another EPD firm, SiPix.

Will these large corporations with their solid resources catch up to Prime View and knock it off its leading perch?

"We've still got the upper hand!" says Scott Liu with conviction. Prime View has been turning the soil in the field of e-paper for five years now, and others just can't match its experience in terms of manufacturing process. Besides the addition of Hydis's production capacity, recently Prime View spent US$215 million (NT$7 billion) to buy E Ink, the most important upstream materials supplier, acquiring full control over all E Ink shares, core technology, and patents. It looks like they are staking out an unassailable position.

After five years of vertical and horizontal integration, with its own EPD technology, process advantages, and strong manufacturing capacity, this small firm has turned into a major force to be reckoned with, and is playing a decisive role in the direction of the new generation of information products. I can't wait for the next chapter of this story!