The e-book reader used to be the mobile-device darling. Now, some suggest that the tablet is killing the e-reader. What is certain is that the e-reader market is declining rapidly, even as the tablet market rises.

According to an IHS iSuppli Consumer Electronics special report, e-readers are being sent reeling by more nimble tablet devices that have gained the ardent patronage of consumers. Specifically, shipments of e-book readers by year-end will fall to 14.9 million units. That's down a steep 36 percent from the 23.2 million units in 2011 that now appears to have been the peak of the e-book reader market.

IHS iSuppli predicts another drastic 27 percent contraction will occur next year when e-book reader shipments decline to 10.9 million units. By 2016, the e-book reader space will amount to just 7.1 million units -- equivalent to a loss of more than two-thirds of its peak volume in 2011.

Apple Crushing E-Readers

"The rapid growth -- followed by the immediate collapse -- of the e-book market is virtually unheard of, even in the notoriously short life cycle of products inhabiting the volatile consumer electronics space," IHS analyst Jordan Selburn said, noting that from 2008 to 2010, e-reader shipments grew from 1.0 million to 10.1 million, up by a factor of 10.

"But the stunning rise and then blazing flame-out of e-books perfectly encapsulate what has become an axiomatic truth in the industry: Single-task devices like the e-book are being replaced without remorse in the lives of consumers by their multifunction equivalents, in this case by media tablets," he said.

"And while other uni-tasking devices -- like digital still cameras, GPS systems and MP3 players -- also face similar pressures and battle dim prospects ahead, all have had a longer time in the sun than e-book readers, demonstrating even more painfully the depth of the e-book reader's fall.

Led by Apple, IHS iSuppli predicts tablet shipments will hit 120 million units in 2012 only after two years of the device being on the market, and 340 million systems are expected by 2016. The versatility of tablets is a large driver. Consumers can read books, check e-mail, surf the Web, play games and watch movies on a tablet.

"To try to maintain its market, e-book readers are likely to continue to sell at cost or even less in the future. Industry rumors speculate the Txtr Beagle reader, an ultra-low-cost model with a 5-inch screen, potentially selling for as little as $13 alongside operator subsidies in 2013 -- less than the cost of the display alone," Selburn said. "Such extremely low pricing may serve to prolong the life of the e-book reader market for a little while, IHS iSuppli believes, but the devices on the whole will not regain the popularity they once had."

Will Tablets Kill the E-reader Star?

Rob Enderle, principal analyst at the Enderle Group, said consumers are realizing they don't necessarily need both devices to consume content. But, he added, the e-reader still has a significant advantage: the devices are much more usable outside and offer vastly longer battery life. E-book readers are typically also less expensive than tablets.

"We are probably going to have an e-reader market for a while, until tablets can address particularly the outdoor viewability aspect of the e-reader because most of the tablets still wash out outside," Enderle told us.

"Viewability is the one sustaining advantage that the e-reader has. They are cheap enough that you can actually afford to have both so it doesn't necessarily have to be an either-or, but once tablets figure out how to do outside viewing I think e-readers as we know them are going to be done."