E-Paper Primer: Part II, Markets

E-Paper Markets

E-paper can be applied across a broad range of applications: some of these now rely on ink and paper, and some make use of established display technologies. Some of them are entirely new product categories and we would expect to see more uses for e-paper emerge as the technologies associated with e-paper mature. At present, despite very different materials platforms, the actual offerings of many e-paper products have a certain sameness to them. In part, this is because some of the areas where the e-paper business is currently focused are areas where function dictates design. Small shelf labels and book readers are both areas where products tend to take on a similar look. Our understanding is that some e-paper firms are beginning to work with industrial designers and this should (1) improve the design of existing e-paper products from the perspective of functionality, aesthetics and in terms of standing out in the marketplace, (2) lead to entirely new ideas of how to use e-paper effectively and profitably.

The main applications for e-paper today include electronic signage; portable electronics; information displays; advertising displays; throwaways such as smartcards, novelties, and smart packaging; and clocks and watches. In a few categories-clocks and watches are the best example here-cost does not seem to be an issue, because customers seem enthralled with the technology and price is sometimes not an issue.

Electronic Signage

Electronic signage is a huge, mostly untapped opportunity for e-paper, where e-paper can add value through the quality of the image displayed, through low power and (perhaps) through flexibility of the substrate. The downside is that signage is an extremely fragmented market and the addressable market for e-paper covers a range of products from simple electronic shelf labels and pricing tags through flashy advertising signs all the way up to large public information displays and outdoor billboards. While e-paper doesnt use much power, hard copy advertising and information boards do not use any power. The problem is that the information is stagnant. Traditional display technologies offer variable information, but most require a lot of electricity and a need to be located near a power source. NanoMarkets believes that e-paper displays have an opportunity here by enabling variable information to be changed, but with low power use. For e-paper to take a sizeable share of this market, however, the color issue will have to be addressed.

E-paper already seems like a good substitute technology for LCD or LED information displays or even paper signage used in airports, vehicles, public buildings, hotels, hospitals, universities, etc. Color is not so important in these applications and the low power of e-paper means that in some of the applications, displays can be powered with batteries, which enables portability. This would be useful in trade shows and where electrical outlets are not easily found. This type of opportunity is noted by many of the epaper firms and will no doubt become quite sizeable one by the end of the forecasting period.

But for the immediate future, where most e-paper firms see the sweet spot for their technology in the signage space are in smart shelving/ESLs and the related area of POP displays. Like the low end of the information display marketof which smart shelving/POP displays could be thought a special case- color is not an important factor and low power is a major advantage. However, some of the existing LCD electronic shelf label technology also offer very attractive battery lives and e-paper will most probably have to compete on image quality and ability to show graphics with incumbent technologies. Several- perhaps even most-of the major e-paper technology developers are targeting this space, which is beginning to take off.

Several extensive trials are underway and e-paper firms believe that they can meet the demanding price targets set by the market. From the e-paper industry point of view, the volume of ESL displays would be very large because of the number of items in any given store that need pricing information; supermarkets stock thousands of items. However, we are talking about very small displays-two inch to three inch would be common-and cost is still a roadblock to widespread application of ESLs, whether of the conventional LCD or e-paper variety.

Portable Electronics

Portable electronics provides huge longer term opportunities for small-and medium-size e-paper displays. In small screens, targets include watches, smart graphics, and cell phone main and subdisplays; in medium size screens, they include PDAs, instruments, games, e-book readers, ultra-mobile PCs, and portable terminals of all kinds.

Two areas in which e-paper provides key advantages are the ability to be read in bright sunlight and low power consumption. However, these advantages are almost entirely offset by the fact that e-paper cannot, as yet, offer color or video capability. As a result, it is very doubtful that this technology will be used for laptop computer screens or cell phone main displays any time soon. (As far as the latter is concerned, the use of e-paper in cell phone main displays is made even less likely by the fact that mobile video is an application of growing importance.)

While we are waiting for color e-paper capabilities to emerge, there are already some niche markets in mobile computing and communications that are addressed by e-paper. One of these is cell phone subdisplays, which have lower requirements than main displays. There are already several e-paper firms addressing this market. Even main displays may be served by e-paper now, if there are factors that truly offset the disadvantages of e-paper. This is most notably shown in the new Motofone product from Motorola, which uses the low-cost of small e-paper displays to reduce the cost of the phone as a way to further penetrate cost-sensitive developing country markets. Finally, and most dramatically, e-paper (along with OLEDs) promises the ability to create roll-up displays that would enhance convenience in the mobility space, by allowing larger displays to be used with smaller systems; this is especially important with cell phones and other handhelds, but may eventually have some relevance in the laptop sector. Again, color is a deterring factor here, but even without color, the growing number of functions on a cell phone would make a larger screen on a cell phone or other handheld attractive.

Then, of course, there are those iconic book readers. This is a new market and there is no doubt that paper-like displays suit it perfectly. The big question mark in this area is customer acceptance. Currently, there are multiple products being offered by various companies to serve this market, so it is obvious that these companies feel it has potential. NanoMarkets has seen very large potential market sizes quoted for these devices and we have been a lot more modest in our forecasts. In making our projections, we have been influenced by the fact that most people buy just a few books a year, so it is not obvious why a book reader would be something that most people would feel that they would need. One possible scenario is that book readers fail as a mass-market item but find specialized industrial and military uses. There are already specialized medical, aviation and military versions of book readers on the market.

But there is also some hope for book readers as a mass market item. It seems that there is a greater proliferation and wider acceptance in the Asian market. Another factor to consider is the changing preferences of the current audience. While many people who have used traditional paper books all their lives may be reluctant to read on an e-book device, there is a growing audience that has grown up with computers and are used to reading and accessing information digitally; they may even expect the ondemand access that only an electronic device can offer.

Disposable Electronics

E-paper is perhaps the most promising display technology for disposable electronics. There is, for example, substantial pent-up demand for a simple alphanumeric function built into smartcards of various sorts for both informational and security reasons. E-paper will also be a contender for smart packaging applications, to entice consumers to buy, or inform them about, the product inside the package.

There are two areas of disposable electronics that are seen by e-paper manufacturers as offering special opportunities. These are smart packaging and smartcards. E-paper displays could provide additional information about a product, which may be critical in the case of certain pharmaceuticals, machines/tools, etc. The cost of e-paper is low-enough to justify this kind of application and the value added may well be high enough to enhance the brand and/or get the customer to pay a little more for the product. OLED displays would compete with e-paper in this space, but cannot offer the same low power consumption that e-paper can or the same textual clarity. E-paper displays might also be used in smart packaging applications for advertising, but the economics of this may be less provable.

Today some firms see large volume opportunities in using e-paper to enhance the security in smartcards. As identify theft, as well as on-line financial transactions, increase, there is a growing need to validate credit and other types of financial payment cards. For now, smartcards display a one-time verification number; for the future, they could also provide additional account information on the display. As soon as the price point is lowered enough to become competitive with traditional card manufacture, this market area could boom.