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Retail's New Fashion Statement

I f you're Internet-savvy but miss the excitement of brick-and-mortar retail, get ready for a brand new look in store displays.

Fourteen billion dollars are spent annually on in-store media, according to Wall Street firm Veronis, Suhler and Associates, making it the third- largest category after TV and print. The reason is simple: Most purchase decisions are finalized in the store. Put your message in the aisle and you have the last word before that decision is made. In-store advertising works.

E Ink Corp. is now the leading developer and marketer of a new technology, called electronic ink, that will be used in retail store displays. Electronic ink combines the superior look of ink on paper with the dynamic capability of an electronic display.

Future generations of electronic ink displays also are being designed for applications as broad-ranging as handheld devices, outdoor billboards and electronic books and newspapers. Ultimately, electronic ink will permit most any surface to become a display, bringing information out from behind computer screens and into the world around us.

E Ink's Electronic Ink Technology

E Ink's electronic ink offers a paper-like look that provides three main benefits over traditional and emerging display technologies:

+ Readability: Because it contains the same coloring agents as normal ink and paper, electronic ink is three to six times brighter than reflective liquid crystal displays (LCDs), exceeds newspapers in contrast ratio and reads easily in both dim light and full sunlight. Like paper, the E Ink display has a clear image that can be seen at any angle without a change in contrast. In addition, special properties of the ink enable smoother text characters than many displays used today.

+ Portability: Electronic ink allows a fixed image to remain on the screen even after the power source is shut off, leading to dramatically longer battery life. The bright paper-white background of electronic ink also eliminates the need for a backlight in most lighting conditions. When commercialized, electronic ink displays should draw less than 1/1000th the power required by a standard notebook computer screen when used for normal reading. As a result, portable devices incorporating E Ink displays could have far smaller batteries, making them less expensive and more portable.

+ Ergonomics: Electronic ink displays are expected to be 30 percent thinner and lighter than traditional LCD displays. Because electronic ink displays read like ink on paper, they should cause less eyestrain than most other displays that typically emit or transmit light.

Merchants Control Electronic Signage

In 1999, E Ink began testing its first commercial application of electronic ink technology in large-area displays in the retail marketplace. The first product gave merchants the ability to change content remotely. That is, merchants could customize messages to changing conditions while maintaining total control over an entire network of information displays. E Ink signs gave merchants the flexibility to run the absolute best promotion for a specific location or group of locations at a specific point in time.

Electronic ink offers merchants a lighter, brighter, dynamic, easier-to- read display technology. E Ink was first founded to bring this new technology to the marketplace and is now making refinements in response to its first trials to better meet the needs of the retail environment.

Smart Handheld Displays

In late February, E Ink and Philips Components, a division of Royal Philips Electronics of the Netherlands, announced that they will jointly develop high-resolution electronic ink displays for use in smart handheld devices.

Under the terms of the agreement, Philips Venture Capital and Philips Components have made an investment in E Ink to help advance their research- and-development program, bringing the company's ultimate vision of electronic paper closer to market realization. The companies will build a high-resolution electronic ink display prototype. The key to this effort is that E Ink will develop electronic ink sheets that Philips will integrate with active matrix backplanes and drivers.

In return for funding and development assistance, Philips Components will receive the global rights to manufacture and sell handheld display modules using E Ink sheets and will have exclusivity on display modules for certain applications, including personal digital assistants (PDAs) and electronic books, for a select period. Commercial development of the display is expected to begin later this year.

"Our investment in E Ink is part of our strategy to have a comprehensive portfolio of application-specific display technologies," said Matt Medeiros, president and CEO of Philips Components. "E Ink's display technology is perfect when readability is of primary importance. In the handheld appliance market, for instance, E Ink can dramatically improve screen definition and power requirements - delivering a lighter, easier-to- read display that will revolutionize smart handheld devices.

"Through this partnership we continue to demonstrate our expertise in display-systems architecture, complementing E Ink's strengths. We expect to be the first electronics company to commercialize this technology, making it a reality for our OEM customers in the shortest possible time frame."

Philips Components is the global leader in large LCDs, color television picture tubes and mobile flat displays. Already a leading developer in wireless connectivity, storage solutions and emerging display technologies, the cooperation with E Ink further broadens Philips Components' technology portfolio.

"Our investment partnership with Philips Components puts us right on track with our business objectives of moving our electronic ink technology into the handheld device and display market," said Jim Iuliano, president and CEO of E Ink. "As one of the world's top display manufacturers and a demonstrated global technology leader, Philips Components is well- positioned to develop electronic ink displays, partner with us on research and development efforts, and help us move products into a $40 billion marketplace through their global distribution network."

About Philips Components

Philips Components, headquartered in Sunnyvale, Calif., is a provider of integrated digital electronic solutions in the areas of displays, storage, connectivity and imaging and sensing. Its global customer base includes the consumer electronics, telecommunications and automotive industries.

Philips Components had annual revenues of more than EUR 6.3 billion last year and employs more than 40,000 people in 39 countries around the world. More information about Philips Components is available at www.components.philips.com.

Royal Philips Electronics of the Netherlands is one of the world's biggest electronics companies and Europe's largest, with sales of $34.9 billion in 2000. It is a global leader in color television sets, lighting, electric shavers, color picture tubes for televisions and monitors, and one-chip TV products.

Its 219,400 employees in more than 60 countries are active in the areas of lighting, consumer electronics, domestic appliances, components, semiconductors and medical systems. For more information, visit www.philips.com.

About E Ink

Headquartered in Cambridge, Mass., E Ink was founded in 1997 to commercialize the use of a proprietary electronic ink that will have a far- reaching impact on how the world visually communicates information. E Ink's technology has the potential to span virtually every industry and create new communications vehicles. The first commercial product using this revolutionary technology is Immedia, a wireless display with the capability to instantly change messages.

E Ink has won several prestigious awards for its electronic ink technology, including being named one of Upside's "Hot 100 Private Companies," Industry Week's "Technology of the Year," Popular Science's "Best of What's New" and a Technologic Partners' Technology Outlook "Investor's Choice." For more information, call 617-499-6000 or visit www.eink.com.