Plastic Logic Gives In To Reality; Cancels Highly Hyped Que

Filling a CES booth with avid potential buyers and oohing-ahing spectators turned out to be a lot easier for Plastic Logic than actually shipping the highly anticipated and much-hyped Que e-reader. Instead of pretending it can deliver a high-end black-and-white e-reader that people will buy in an iPad world, Plastic Logic is officially benching the Que in favor of a second-gen ProReader device. In a statement posted on the company’s web site Tuesday, CEO Richard Archuleta admitted defeat: “We recognize the market has dramatically changed, and with the product delays we have experienced, it no longer makes sense for us to move forward with our first generation electronic reading product.”

The elegant Que captured some attention in mid-2009 when Plastic Logic showed off the device at All Things Digital D7. Ultra-thin and considerably more elegant than a Kindle DX, the prototype delivered perfectly rendered PDFs — unlike Amazon’s devices at the time — and seemed on pitch to appeal to business people eager to shed pounds of docs.

But that demo was months before Plastic Logic execs realistically thought the device could ship. It got more boosts with a star turn at CES (the video embedded below should show you why it was so attractive), when it signed a deal with AT&T (NYSE: T) to provide 3G and when Barnes & Noble (NYSE: BKS) agreed to sell the e-reader — and again couldn’t capitalize by actually shipping the device. Publishers signed on as partners — the Wall Street Journal, USA Today, the FT, The Atlantic, Forbes, and more. For months, the company insisted the Que would ship.

During that time, Amazon (NSDQ: AMZN) added PDF functionality and fundamentally revamped the Kindle DX — adding true PDF access, slimming down the size and the price, upping the readability — and, most damning, Apple (NSDQ: AAPL) launched the slender, large-screen color iPad at an affordable price. The iPad captured multi-taskers imagination and quickly took on a business role. By the time D8 rolled around this year, one-time potential Que users were bragging about traveling with only an iPad. For single-taskers, the Kindle DX changes made the black-and-white device in a graphite case more attractive and more of a Que competitor than the clunky first-gen version. The Que started at $649 for WiFi-only, coming to $749 for an 8GB model with WiFi and 3G. The iPad runs $499 for WiFi only with 16 GB, and $829 for the 3G top of the line. The Kindle DX dropped 22 percent last month to $379 for 3G.

The new marketplace, combined with the problems it was on having on the production end, finally led Archuleta’s acknowledgment today what was by now as widely expected as the device once was: The Que, aimed at enterprise more than consumer all along, was dead before arrival.

What’s next for Plastic Logic? From Archuleta’s statement: “We plan to take the necessary time needed to re-enter the market as we refocus, redesign and retool for our next generation ProReader product. We continue to perfect our core plastic electronic technology and manufacturing processes that are central to our product’s unique value proposition.” The idea is that plastics can replace silicon — and that the technology used for Que and evolved since then is still valuable enough to merit continuing as a company.