In 1997, Barrett Comiskey, along with some fellow undergraduates and a professor at the MIT Media Lab, developed a new type of paper that could change the letters “printed” on it by running an electrical current through it. The idea was to have a digital newspaper that could update itself with new articles each morning. Eleven years later, that vision has reached the consumer market with devices like the Sony Reader and the newly released Amazon Kindle, on which books and newspapers appear on electronic-paper displays made by E Ink, the company Comiskey founded. He has since moved on from inventing (he is sole or co-inventor on 40 US patents) to Shanghai, where he advises US companies – including E Ink – on sophisticated manufacturing strategies through his firm Nicobar Group. He talked to CHINA ECONOMIC REVIEW about getting high-tech products made to standard in China.
Q: What’s the idea behind electronic paper?
A: Electronic paper is the concept of a thin, flexible, lightweight, low-power display that looks and feels like ink on paper. The main value is the look and the reduced power consumption. The advantage over the dominant technology, which is LCD, is the paper-like look, high brightness, high contrast ratio, low power and wide viewing angle. E Ink, the company I started in 1997, is the leading provider.
Q: What are the challenges involved in setting up prodcution facilities for these displays?
A: The supply chain of the electronics business is very complicated. What’s important is supply chain coordination and maintenance of a specification across all of the different players. The material for electronic paper goes through several different places and several different steps, so it’s very important to make sure that everyone agrees on the spec – which for electronic paper is very complex, because it’s a display ultimately viewed by a human user.
Q: Why do you need to be in China?
A: In the electronic component business, it’s important to be near your customer base, which is in China, where most electronics manufacturers are. So it’s a requirement for E Ink to have a significant presence here. They still make the ink, the core technology, in America. Each company has to choose what it’s going to do in house and what it can have done elsewhere. It’s a complex optimization across many factors.
Q: Is quality control in China as much of an issue for high-end projects as it is on the low end?
A: The lower the margin the supplier has, and the less total money he has to work with – as well as the less tight communication there is between you and your supplier – the more he’s going to cut corners. Communication, not so much observation, is the crucial thing. It needs to be clear what the requirements and specifications are, what’s okay and what’s not okay in terms of material substitutions. When you get to the higher end, there’s more margin in the value chain, so the pressure to take shortcuts is lower, but with significant rising costs, the situation is changing. VAT rebates, currency, inflation, all with expected annual cost reductions. The profitability is going down across the board. So the pressures are still there for the domestic manufacturer to find ways to reduce costs, even at the higher end. I think the larger the scale of the business and the more sophisticated the company, and the more help they have from experienced people on the ground – whether that’s their employees or third parties like Nicobar – the more clearly they can specify and enforce their requirements. I’d say problems come more from lack of complete specification and good communication than from anything else. For example, the US side assumes certain materials will be used, or certain substitutions can’t possibly be made, because they aren’t standard in the US. But if the product is under-specified, then no matter how sophisticated it is, you might not get what you want. The bright side is that there is a lot of room for efficiency and productivity improvement, so we still see a very healthy future in China.
Q: Are low costs the main reason your clients feel they need to look at China, or are there other rationales?
A: We typically work with US manufacturers, that have proprietary technologies and brands, who want to take advantage of low-cost production infrastructure now, with an eye towards moving up to higher value-added activities like engineering and then looking at how to best play in the domestic market. We think that’s a winning formula – you start by doing what you know well, and then do something that’s one step away, and then you’re here for the long-term to be a force in the domestic market.
Q: What do you think of the future prospects of devices like the Sony Reader or the Amazon Kindle?
A: The long-term success of electronic books and newspapers depends on a change in consumer behavior, and that always takes a long time. One of the bottlenecks in the past for e-books has been the quality of the display, which E Ink solves, or goes very far towards solving. The other major bottleneck is availability of content, and that was one of the major weaknesses of Sony’s product in Japan – they didn’t have enough titles. The publishers are reluctant to release content because they make a lot of money from it, and they’re afraid of having authors going directly to retailers. The nice thing about Amazon is that they have serious market power, because they’re a major distribution point. So if anybody can get a good deal out of the publishers and provide broad content, it’s likely to be them. The interesting thing about the Kindle – and this is really the brilliance of it – is the fact that it’s always online. Our original vision of an electronic newspaper was a device that’s constantly getting the latest news in real time. Being always connected is a major part of that vision. So again, it’s a different type of user behavior than widely exists today, so we’ll see how quickly and what type of people pick it up. I’m pretty optimistic about the always-on connectivity and the broad availability of content and a decent display – a lot of the pieces are there. How quickly it will be the dominant solution, I can’t predict.
Q: Many popular books in China are already published directly online. Might an e-book reader work in this market?
A: There are some on the market, and I think it makes a lot of sense. The business model for publishing in the Western world is predicated on the sale of content, and my understanding of the Chinese market is that, like in some other industries, much is available for free. With insufficient content revenue there may not be enough residual to pay for the hardware. Therefore you’d have to go for very low-end hardware. As the cost of E Ink and other components goes down, that could be a good fit. But at this point, E Ink is still a premium display.
Q: Do you still read books on paper?
A: Yeah, I do. [laughs] I need to pick up a Kindle.
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