The next six months will continue to be a severe test for startups, especially those investing heavily in research and development. This is particularly true in the flat-panel display field, which is still reeling from a recent roller coaster ride. Last year LCD makers responded to falling demand by slashing prices to maintain production levels. Prices fell so far that the industry inadvertently triggered an explosion in a new category early this year, as consumers began swapping bulky CRTs for desktop LCD monitors. At one point, Steve Jobs even declared that Apple thenceforth would only ship flat panels. But after just a few months, demand soared past capacity, causing a price spike and a reversal of Apple's position.

Today we see the mainstream display industry settling into a sustained drive toward long-term cost reduction and capacity expansion. The major factors that will affect major LCD makers are industry consolidation, forward integration and the rise of South Korea- and China-centric production.

Within that context, the good news for display-oriented startups is that demand remains healthy and is expected to grow. The bad news is that traditional venture capital has dried up, especially for long-term, high-risk, high-reward projects. Simultaneously, government funding for U.S. display research has been slashed.

Under this pressure, several startups, including high-profile Candescent Technologies, have exited the display business, causing further concern to potential investors.

Over the past year, E Ink has survived and even thrived in this environment by raising $33 million in strategic capital, gaining early sales wins and demonstrating such technologies as a color graphical display and the thinnest available active-matrix display.

Partners have been critical to our survival and success. We responded to the technology slump by focusing our business model on our electronic-ink material and by outsourcing all other development and production. We formed strong partnerships with Philips Components and Toppan Printing-both display industry leaders with the strength to deliver top-quality products in down markets. That has allowed us to continue the development and scale-up of a disruptive technology at full speed, even during tough economic times.

E Ink is experiencing strong interest from TV set makers all around the world but especially in Asia. The recent decision of the Chinese government to order millions of electronic LCD-based textbooks for its schoolchildren means that we are likely to see a new wave of electronic reader devices, starting in Asia and reaching the United States by end of next year.