Toronto: Canada's Kobo Inc is a tiny player in the crowded digital book market, but it has ambitions to become one of the leading global players, in part by offering one of the least expensive e-readers in the field.
Kobo, an electronic book retail spin-off from Indigo Books & Music, needs to compete on price because the business has become hyper-competitive, as the company's chief executive readily concedes.
A key part of its strategy is to avoid taking on the likes of Apple and Amazon directly and instead committing to open systems that allow its e-books to be read on a variety of devices.
"The market is rapidly consolidating - we are the David among probably three or four Goliaths," said Mike Serbinis, chief executive of Kobo, which is also the content and technology provider behind Borders Group Inc's electronic bookstore, launched Wednesday.
"By next year, there will be three that matter globally and Kobo wants to be one of those three," Serbinis said in an interview this week, noting the number of competitors that have "evaporated" in recent months.
Kobo, backed by Indigo, Borders, Australia's REDgroup Retail and China's Cheung Kong Holdings operates a global e-reading service that offers more than 2 million e-books and sells an e-reader through partners including Indigo, Borders and Wal-Mart Stores.
In the e-book and e-reader markets, Kobo is competing with established giants such as Apple Inc and its popular iPad tablet computer, and Amazon.com Inc, which offers the Kindle readers and has 620,000 digital books and 1.8 million free out-of-copyright titles.
Toronto-based Kobo, which was rebranded from Shortcovers when it spun off from Indigo in December 2009, aims to stand out by being "device neutral," offering e-reading apps and supporting open standards for everything from a smartphone to a Sony Reader to the iPad.
"Hyper-competitive"
Serbinis says Kobo's own $ 149 no-frills e-reader device, made in Taiwan, has sold out consistently since it launched two months ago.
"It's been a huge hit for us, driving tons of usage and purchases," said Serbinis, who declined to give specific figures or sales. He admits it's a "hyper-competitive market."
The competition will likely remain cut-throat during the vicious price war. Sony this week cut the price of all its readers, discounting its basic Pocket Edition to $ 149.99 from $ 169.99.
Earlier, Amazon slashed the price of its cheaper Kindle to $ 189 immediately after Barnes & Noble lowered the price of its Nook to $ 199.
Borders now offers a $ 20 gift card with the purchase of a Kobo e-reader.
Kobo's lightweight reader is a simple, single-purpose device that uses E-Ink display and Bluetooth for wireless connectivity. Unlike The Nook or the Kindle 2, the Kobo device does not support Wi-Fi or 3G.
Kobo, which currently has about 120 employees, isn't trying to be a hardware company. The device is important, Serbinis said, but ultimately, the business is about the content.
"This is a once-in-a-500-year transformation in how we read books. ... We're about the e-reading experience first, and that means selling content. And for now, that also means selling devices."
Kobo is quickly moving into Europe and other parts of Asia as well and is eyeing expansion into digital newspapers and magazines, Serbinis said.
"As far as what happens next year or the year after, there are many options: going public, other investors, acquisition is always an option," he said.
Indigo, which sells books and other entertainment products over the Internet and operates Canada's largest bookstore chain, currently owns 57.7 percent of Kobo.
"The options are there, but we're mostly focused on being one of the three global players ... we have nothing to lose."
Comments
0 comment