Aluratek Inc., a maker of consumer electronics started by a trio of executives from Irvine’s IOGear Inc., is jumping into the electronic book reader market.
Earlier this month, Irvine-based Aluratek signed a deal with book retailer Borders Direct LLC to sell its e-reader—the Libre—in Borders stores and on its website.
It was a big win for the small company, which started in 2005.
“Borders tested several eBook readers and they selected ours,” said John Wolikow, cofounder and vice president of sales and marketing. “It’s really big for us.”
The Libre is among four e-readers Borders is selling. The company selected Aluratek’s device as its low-price model, making it a key part of a brewing price war over e-readers.
“Borders wanted to give their customers a choice with a good, better, best model,” Wolikow said. “We are the entry-level play for Borders.”
Borders is looking to compete with Barnes & Noble Inc., which sells its own e-reader called Nook.
Both are up against the 800-pound gorilla in the market, Amazon.com Inc.’s Kindle.
Apple Inc. recently entered the fray with its iPad, which can run different book reader apps and links to Apple’s iBook store.
At about $120, The Libre sells for less than other e-readers. Besides Borders, Aluratek’s e-reader also is sold at Sears, K-Mart and online.
The nearest competitors by price are Sony Corp.’s Reader Pocket Edition, which sells for $170, the Kindle, which goes for $190, and the Nook, which sells for $150.
The iPad, which does a lot more than a typical reader, sells for $500.
Wolikow said Aluratek is able to sell its Libre cheaper because it doesn’t use electronic ink, a proprietary technology of Boston’s E Ink Corp.
Instead, the company developed a technology that pairs light reflection with a less expensive liquid-crystal display screen in what’s called monochrome LCD.
“It’s allowing us to have a competitive advantage,” Wolikow said.
Aluratek seems to be in the right place at the right time.
Last week, an e-reader price war broke out among the big booksellers after Amazon and Barnes & Noble cut prices on their devices and Borders followed suit, even though its first e-reader isn’t due until July.
The market for e-readers is fairly new and growing.
Sales of e-readers are expected to double in 2010 to roughly 6 million units, according to Boston-based market researcher Forrester Research Inc.
E-reader revenue is expected to top $500 million this year, according to Forrester.
Aluratek’s sold some 100,000 Libre readers since they went on sale at the start of the year, according to Wolikow.
Borders is taking presale orders for the Libre on its site and isn’t disclosing how many orders it’s received.
The company plans to put its name on Aluratek’s e-reader. Software on the device is set to drive consumers to Borders’ website to download books, which go for about $10 a pop.
Aluratek was started by a handful of former executives at IOGear, which makes networked keyboards, mice and video gear.
Wolikow headed North America sales at IOGear.
Aluratek’s Chief Executive Victor Wang was vice president of operations. Andrew Wang, who is Aluratek’s director of product development, and David Song, who is director of North America Sales, held similar roles at IOGear.
The founders left IOGear because they wanted to try their hand in consumer electronics.
“We had identified that there is a huge digital revolution under way and we decided that we wanted to go after this emerging trend,” Wolikow said. “Everything has gone digital—you’ve seen it with the iPod, cameras and camcorders—and we had some good product ideas that we wanted to pursue. It was tough to leave IOGear, but we wanted to follow our ambitions.”
Aluratek’s lineup also includes digital picture frames, iPod docking stations, digital camcorders, Internet radios and 3G routers, among other devices.
Some of its products are sold at Fry’s Electronics and Best Buy.
Aluratek has been working to get its name out there in a crowded market.
“It’s pretty tough starting off as a younger brand,” Wolikow said. “We have to differentiate our products so we try to do something unique.”
The company is funded by its founders and has about 25 workers.
It also counts local tech veteran Pat Patel as an investor. Patel was a founder and former chief executive of Tustin’s Cherokee International Corp.
Cherokee, a maker of power supply gear, was taken private in 2008 in an acquisition by Lineage Power Holdings Inc. for $105 million. Lineage Power is a unit of Los Angeles-based private equity firm Gores Group LLC.
Aluratek recently doubled its space in a move to an office in Irvine, near the Tustin border, where it does sales, marketing and product engineering. Manufacturing is done in Asia.
Privately held Aluratek doesn’t disclose financials. The Business Journal estimates its yearly sales at about $25 million.
The company is set to follow up its Libre e-reader debut with two models later this year, one which adds a wireless connection and another with a touch screen.
