The race is on to build the perfect e-reader and tablet display. It needs to be easy on the eyes for e-reading, bright and beautiful for playing video, and efficient enough to lasts for days on a single battery charge.

An Andover, MA, startup called Pixtronix hopes it has the right combination of technology and business plan to bring such screen to market. Like a liquid crystal display, Pixtronix’s display uses a backlight, but unlike most LCDs it also reflects ambient light, allowing for an easier-to-read monochrome e-reader mode. The pixels in the display are made of tiny silicon shutters: micro-electromechanical systems (MEMS) that open and close to emit red, blue, and green light in rapid sequence, creating the illusion of a range of colors.

Unlike most other display technologies, there are no filters, polarizing films, or liquid crystals for light to pass through in the Pixtronix system. This means the backlight needs to be much less intense, using a quarter of the power that standard LCDs use,says Nesbitt Hagood, founder, president and CTO of Pixtronix. In Pixtronix display, color is produced by the flickering colored backlight in combination with shutters opening and closing. When the shutters are open, ambient light reflects within the MEMS structure to amplify the color, says Hagood. Turn off the backlight, and an open shutter produces a whitish-gray pixel. When the shutter is closed, the pixel is black.

A Pixtronix display differs slightly from another up-and-coming MEMS display technology, called mirasol, from Qualcomm. In this display, pixels are made of MEMS light chambers with movable, reflective surfaces that cause light waves to interfere with each other. Color is determined by the distance between the reflective surfaces. Mirasol is an extremely low-power display because it doesn’t use a backlight at all, but its video quality is currently somewhat grainy. Another display startup, called Unipixel, has developed shutter technology somewhat similar to that of Pixtronix. A backlight and thin polymer film shutters produce both color images and video. In May, the technology licensing firm Rambus acquired a portion of Unipixel’s intellectual property.

Pixtronix hopes to license its technology to LCD manufacturers, which could adapt the equipment used to make LCDs to produce the screens MEMS shutters. “Billions and billions of dollars have been spent developing relatively mature [LCD] manufacturing facilities to get nice looking, high-yield displays,” says Hagood. “If you’re going to have a competitive product in the marketplace, you have to leverage that investment.”

Pixtronix isn’t the only company trying to do this. Pixel Qi, which spun out of the One Laptop Per Child Project, is also building displays in LCD facilities. But whereas Pixel Qi has redesigned the components of LCDs–layers of optical polarizers, filters, and liquid crystals–to produce a display with both backlit-color and e-reader modes, Pixtronix has done away with all of the components of an LCD except for the backlight and the layer of transistors on glass that control the pixels.

Paul Semenza, an analyst for DisplaySearch, a technology research firm, says Pixtronix’s approach is relatively simple compared to LCD technology. But he notes that it is tough for novel technologies to break into the display market to break into. “LCD makers have a track record of beating back innovations that were thought to be ‘better’ than LCD,” he says. “It’s a little hard to say yet whether it will succeed.”

Another hurdle to adoption, says Semenza is something called “color breakup,” in which the red, blue, and green colors appear to separate out, instead of blending together to produce a single color. Some people are more sensitive to this effect, which can occur with MEMS displays.

According to Hagood, Pixtronix has developed an algorithm that determines how fast to sequence pixel colors to minimize color breakup. “So far, people are pretty happy,” he says. “Image quality isn’t going to be the challenge.”

Hagood adds that the biggest challenge will be the same as it was for LCD makers in the early days of that technology: getting high yields with low-cost manufacturing. He expects the first displays with Pixtronix technology to be in products by late 2011. Then users can judge whether the perfect tablet screen has truly arrived.