How will Borders' liquidation affect Kobo e-readers and e-books?
For gadget fans, the news that Borders Group Inc. plans to liquidate its remaining assets prompts the question: what about Kobo?
The Toronto-based e-book and e-reader startup has been associated with Borders since late 2009 when the bookseller took an equity stake in it (now 11%). As the so-called e-reader wars heated up, Borders increasingly promoted Kobo e-readers in its stores. The devices were Borders' answer to Barnes & Noble's Nook and Amazon's Kindle.
That synergy is about to end. On Monday, Borders announced it would close its remaining 399 stores after failing to find a buyer for its long-troubled business. The news could affect Kobo on two levels. First, the company will lose its highest-profile U.S. distribution partner, which could dent sales. There's also the matter of how Borders' Kobo stake will be handled in the liquidation process.
Kobo, naturally, is seeking to reassure its users and other consumers in the wake of the news. In response to a Forbes request, the company issued the following statement, which seeks to minimize the perceived impact of Borders' closure on its own business by detailing its other retail partners and referring to its other investors.
"As one of the early investors in Kobo, Borders has a minority stake in our company and serves as part of our distribution in the U.S. along with Walmart, Best Buy, Sears and other retailers. As a member of the broader book publishing and retailing community, we are watching Borders' story with interest and send our best wishes to all the people of Borders."
To be sure, Kobo has had plenty of time to prepare for Borders' shutdown. The second part of Kobo's written statement notes that the companies have been transferring control of Borders' e-book customers to Kobo since June. The statement also contends that Kobo's customers -- whether they were originally Kobo or Borders customers -- will not experience any disruptions as a result of Borders' actions.
"In June Kobo and Borders began transitioning Borders' customers' eBook accounts to Kobo to provide direct access to the most up to date eReading functionality, apps, and devices. Kobo owners will continue to use their eReader devices as usual and browse and shop for new titles in the Kobo Store with no interruption in service."
Kobo likes to think of itself as the most global of the large e-book/e-reader companies. It's a point Kobo Chief Executive Michael Serbinis mentioned during a recent interview with Forbes. Barnes & Noble, after all, is mostly a North American company and Amazon, while a major brand and retailer worldwide, appears less intent on expanding into local language markets than Kobo.
Thus, it isn't surprising that Kobo's statement ends with a mention of its international outlook and business, including its launch of a German unit last week. The reference is also a reminder that Kobo's Borders setback is mostly confined to the U.S.
"Kobo continues to grow in the U.S. and around the world and we're very pleased with progress of the launch of the new Kobo eReader Touch Edition and European office with Kobo Germany."
UPDATE, 7/19/11: In an attempt to “clarify misconceptions,” Kobo released more information about its relationship with Borders on July 19. Here are the new parts that don’t overlap with the company’s earlier statement:
- Borders’ Kobo shares are subject to the terms of the Kobo shareholders’ agreement which, among other things, restricts their transfer or disposition. Kobo also said — though this is extremely vague — “As an interested party in the Borders bankruptcy proceedings, Kobo has made certain filings with the court to preserve its legal rights moving forward.”
- Kobo does not rely on Borders for content. Kobo owns the publishing agreements and has direct relationships with all major publishers, including Random House, Simon & Schuster, HarperCollins, St. Martin’s Press and many more. Kobo is solely responsible for payment to publishers for eBooks sold through the Kobo platform and publishers will continue to be paid on time as usual.
- For those Borders customers who haven’t transferred their eBook libraries to Kobo, the process is quick and easy. Borders customers can visit kobo.to/bmigrate to transfer their Borders eBook library to Kobo. No additional steps are required to continue reading on your Kobo eReader. For those Borders customers that are using Borders apps to access their eBook libraries, visit kobo.com to download a free Kobo eReading app for your computer, smartphone or tablet.
