Lastly, Vapor is the pure play, the lone publicly traded e-cigarette company. Its performances suggest that the economics of e-cigarettes are difficult, as it trades at 85 cents a share and has lost money on flat earnings the past year. But others, like Swisher, have succeeded in building market share with savvy marketing, de Lozada says.
"There is a window with a bit of an opening now, but if they have to compete with big brands that are already established, their profit margins will be squeezed," Kwon says. "And Big Tobacco has the advantage of huge distribution no one can match."
More broadly, media firms could be a big winner regardless of which e-cigarettes prevail, because they're being advertised on television – a venue where traditional cigarettes have been banned for years. It's a new front for the tobacco industry, which still spends billions of dollars on other media, including magazine ads, promotions and sponsorships. That trend will probably accelerate in an all-out marketing e-cigarette war as Altria and Reynolds enter the market this year. And e-cigarettes already have outspent traditional cigarette makers advertising in major media this year, according to data by Kantar Media.
New frontiers in advertising and social media may win some of that spending. The Internet advertising industry could benefit from e-cigarettes supported by people online via the likes of Google's recently launched "shared endorsement" service, which sells information about users' endorsements. (It's not a coincidence that digital entrepreneurs like Parker have entered the space.)
And what about Big Tobacco's role? Altria and Reynolds need to compete, but the cost of a massive new marketing push in a sector where regulatory issues are still being sorted out might not make perfect sense, at least for now, analysts say, especially if such new costs mean any trade-off for tobacco company shareholders who purchase the stocks in part for their high dividend yields. "They are in a business that is highly profitable that does not require a whole lot of investment," says Kwon, while noting a changing market could upend such reluctance. "This could be much different in the future, and this is something they will have to invest in. It's in its very early stages, but it has potential to become something big, and it could have an impact."
Analyst Bonnie Herzog of Wells Fargo Securities sparked media attention with a report earlier this year that e-cigarette growth will continue for the next decade and overtake traditional smoking sales for U.S. tobacco companies. A number of analysts declined to comment, citing a pending earnings period for tobacco companies, and Herzog was not available for comment. However, big brokers have generally been recommending the stocks for their dividends and steady earnings, and analysts have expressed skepticism that e-cigarettes, with less than 1 percent of the total market, will make much impact anytime soon.
Meanwhile, the regulatory and legal issues surrounding their marketing has been slowed by Washington's budget stalemate that led to government shutdown. A number of decisions are due soon that could bring clarity and more regulation.
"All of these big gains [for e-cigarettes] are coming at a time of zero regulation, no taxes and a lot of hype," says one analyst who requested U.S. News to not use his name. "The bottom line is that only a limited number of people will switch once the playing field is leveled. Our research shows that it won't happen because e-cigarettes are just not as satisfying."