[rwmj]

It's a terrible example (or perhaps a "fantastic" example of a company avoiding reality for eons). The writing has been on the wall for EB for at least 15 years, in fact there was even a book written about it:

http://www.amazon.com/Blown-Bits-Economics-Information-Trans...

How do we know they're even going to make money now?

[meric]

"About 85 percent of revenues come from selling curriculum products in subjects like math, science and the English language; the remainder comes from subscriptions to the Web site, the company said."

They weren't avoiding reality. It looks like they've planned this years ago, but kept printing encyclopaedias while they were still profitable.

Let's say after the year 2015, demand for non-tablets will begin to reduce by 50% per year. Does that mean companies should stop making non-tablets in the year 2015? For some, maybe. What if several competitors has already exited the market (as had happened here), should you exit too? If your competitors left that means although while the pie has gotten smaller, you're getting a larger slice of it. Stay while it's profitable.