New E Ink Leader Sees Colorful Future for Company Under Taiwan’s Prime View International

3/15/10Follow @wroush

A couple of weeks ago, Xconomy broke the news that Russ Wilcox, co-founder of Cambridge, MA-based E Ink, was leaving the company after eight years as CEO. Shortly after that report I caught up with the organization’s new leader, executive vice president T.H. Peng, who was formerly director of strategic planning at Prime View International (PVI), the Taiwanese display maker that acquired E Ink last year for about $450 million.

We talked about Wilcox’s departure, as well as the division’s expansion plans as it tools up to produce even more of the electrophoretic displays that go into e-book reading devices made by Amazon, Barnes & Noble, Sony, and other companies. Currently the company has over 100 job openings in 37 different categories, from R&D engineers to manufacturing specialists, making it one of the fastest-growing technology organizations in Massachusetts.

The division definitely needs the help, considering forecasts that annual sales of e-book devices, which surpassed 1 million for the first time in 2008, are expected to rise to 18 million by 2012. It’s also in the midst of an aggressive push to perfect full-color displays to supplement today’s monochrome versions—an improvement that’s critical to PVI’s future if devices with electrophoretic displays are to keep pace with LCD-based competitors from the likes of Apple.

Here’s a writeup of my conversation with Peng. E Ink’s vice president of marketing, Sriram Peruvemba, was also on hand for the interview.

Xconomy: How has the acquisition of E Ink by Prime View International changed each company?

T.H. Peng: The first thing to know is that right now, the Cambridge office is one organization of a global company, and the name is Prime View International. The focus will not just be on Cambridge. It’s going to be a combination of the management team in Korea, Taiwan, and Cambridge, under the global organization. We have a CEO in Taiwan, Scott Liu. Right now in Cambridge, we are working very closely with a team in Taiwan on the integration effort, in which we want to come up with a very strong service to our customers as well as supply more and more advanced products to our customers.

X: What can you tell me about the thinking and the timing behind Russ Wilcox’s departure as CEO of the E Ink division? Why was this the time for the transition?

THP: I don’t want to speak for Russ. The thing I do want to say is that I really admire his capabilities. He’s one of the smartest persons that I have met. We still maintain very good relations after his departure. The decision was made jointly by both the company and by Russ himself. We believe it’s best for the company, and both are ready to move on.

I want to add one more thing: his departure is not a surprise to anybody in Cambridge. He basically announced his departure in January to all E Ink colleagues, so we were all aware of that back in early January, and we had a farewell party two weeks ago. All of the E Ink folks gathered to say goodbye. It was a very warm and cozy affair.

X: I understand he will still be involved as an advisor?

THP: He has been with the company for a very long time, and we really want to continue to have a relationship with him. Hopefully, he can continue to contribute his knowledge and his wisdom to the company. We will continue to have him present as an advisor in the company. That is his role in the future. He is not going to be involved with the day-to-day business. He is going to be providing us more of a long-term view about the business.

X: What are the highest priorities for the company in 2010?

THP: We are going to triple the capacity this year in Cambridge—this is the first thing we are going to do. So we are planning to hire in 2010 more than a hundred employees in both Cambridge and South Hadley. Then we are conducting several advanced projects. We believe we are now a leader in this business, and we want to continue that leadership and also contribute to the technology and provide better products. In the past we have had a lot of ideas for color, and for better ink, but the company was limited in its resources. Now, we are part of a global company, and the company has a lot of financial arms that can help us do a lot of different projects. All of our scientists and engineers are very excited. Among those 100 employees will be a lot of R&D people, so we are talking about continuing to expand our capabilities as well as our labor force to be able to meet the goals set by the company for the Cambridge team.

Sriram Peruvemba: Just to add to what T.H. said about capacity, to give you a feel, last year we expanded our capacity by 5X, because the market was also five times the market that it was in 2008. So this 3X expansion is on top of that 5X. In other words, we will be at 15 times our 2008 production.

X: Are most of the units you’re producing going into e-book reading devices like the Kindle 2 and the Barnes & Noble Nook?

SP: Most of the products we’re shipping right now, in terms or revenue, are in what we call the e-publishing space—e-books and e-newspapers and things like that. In the future, we hope that textbooks will become a large subset of that. But in terms of volume, the largest areas are the small segmented displays, for things like wristwatches and smartphones.

X: T.H. mentioned that your engineers have ideas about how to produce color versions of electronic-ink films. Where does that technology stand? Is it becoming more urgent for the company to come up with a workable color version of its technology given the impending debut of Apple’s iPad, which has a color LCD screen and will have a built-in e-book app?

THP: We have a lot to say about this. Sri and I have both been in the LCD industry for a long time. The iPad is not the first LCD-based e-book reader. More than 10 years ago, there were already a few e-book reading devices using LCD screens. But those products have never been quite successful in the market. There is more than one reason—for example, the infrastructure of digital publishing was not well established, and maybe the form factor was not as cool. But we believe one of the key reasons was that LCD screens do not provide a very good digital reading experience.

LCD can do full color and video rate animation, and the display looks very nice, but there are a lot of problems. One is that you just don’t feel comfortable when you’re reading on an LCD screen. Very often when I have a long e-mail to read I just print it on paper, because I want to comprehend it and I just feel more comfortable doing that. We believe that is the key reason the LCD-based e-book readers were not popular.

We believe the iPad is very well positioned to be a good product, but we think it’s better for movies and video, not necessarily for digital reading. Having said that, we believe the existence of the iPad product is good for us. Just think about it—in the next month before the launch of the iPad, how many articles are there going to be talking about digital publishing and e-books? That is all really good for us, because it’s helping to create a very strong consumer awareness of digital reading, and it’s also good for creating awareness among publishers.

We already have companies like Amazon and Barnes & Noble and Sony who are endorsing digital publishing, and now we have another very good company called Apple. So generally this is very good for us. Yes, we do see some potential competition, but we believe the positives resulting from the iPad are a lot more beneficial. So we actually welcome the iPad—we think it’s going to be a joint force with us in creating a stronger digital publishing industry.

X: Nonetheless, you’re working on color versions of electronic ink to compete with the LCD-based devices, right?

THP: Let me continue to talk about this issue. First off, our color is different from LCD color. It’s reflective and bistable, meaning that even if you switch off the power, the image will still be there. You feel more comfortable reading a reflective display versus reading a backlit, powered display, which produces eye strain.

Having said that, our color quality will not be as good as LCD, initially. But we have already received very encouraging signs from a few customers that they want to launch our color e-paper product by the end of this year or the beginning of 2011. The company has just announced at the CeBIT conference that Hanvon, a Chinese company that just got listed in the last week and received great support from the capital markets, will design a color e-book reader using E Ink’s technology. They’ve raised a lot of money and have received strong financial backing to do this and to deliver their new product, which will be in early 2011. That will be the first phase for our color product.

We also have quite a few advanced color projects now in the pipeline. As I’ve been saying, we are recruiting a lot of great scientists in the Boston area to continue to explore what would be the best technology solutions for us to do color, and we already have quite a lot of ideas about this. Initially, the display quality will not be as good as LCD, but it will provide a good reading experience vis a vis LCD, simply because it’s reflective and bistable. If you want to do gaming, movies, video, you will still go to a LCD. But we believe that if you want to do digital reading, the reflective color E Ink screen will give you a better solution than LCD. For the long term, what we really want to do is, hopefully in a couple of years, launch an advanced color product in which the performance will be a lot better than in our first phase of color products, and hopefully providing very good color. We are working very hard on that.

X: What can you tell me about your technical ideas for creating better color displays? Is adding color simply a matter of tweaking the company’s existing microcapsule technology, or do you have to go back to the drawing board and approach it in an entirely new way?

SP: Even if we slightly describe it, we will probably reveal stuff that we are not ready to talk about. There is more than one approach, and exactly which one we will choose in the future, we don’t know.

With the product that we are planning to launch by the end of this year, when you put it side by side with an ordinary newspaper, the color will be better than the color in most newspapers. So that market will be satisfied. For textbook markets, the color will also meet their expectations. Where we will likely fall short is in digital magazines, where there are glossy pictures.

The approaches we are taking include improving the monochrome display to have greater contrast, so that when you overlay the color layer, it will look at least as good as the current black and white screens, if not better. In other words, we need to preserve all the goodness of the monochrome layer, and put color over it without sacrificing anything.

Wade Roush is a contributing editor at Xconomy. Follow @wroush

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