Borders' Newest E-Book Reader: How the Kobo Could Still Win the Race

Last Updated May 10, 2010 1:42 PM EDT

Borders Group (BGP) has announced a cheap Kindle competitor called the Kobo, to be available in the U.S. in June and serviced by its own e-book store. The nation's second largest bookstore is months behind competing readers from Barnes & Noble (BN), Sony (SNE) and Apple (AAPL), and years behind Amazon's (AMZN) Kindle. Weirdly, though, it may not be too late for the Kobo to compete.

Sure, analysts are balking at the Kobo's lack of 3G wireless or WiFi, which means that Kobo owners will have to hook up the device to a PC to buy books. But new numbers from Apple's iBook Store, broken down by PaidContent, suggest that even the most passionate early adopters and profligate media spenders -- i.e., Apple customers -- don't buy books very often. That means that the added convenience of wireless book-buying might be adding what consumers view as an unnecessary price premium to devices like the Kindle, Nook and iPad.

The lack of wireless means the Kobo can sport roughly a $150 price point (the price has yet to be finalized), which is $100 less than the cheapest Kindle. Sony's Reader Pocket Edition is the Kobo's closest price competitor, with similar specs and a rumored $199 pricetag, but it's not on the market yet.

Technically speaking, the Kobo isn't a Kindle killer. For that matter, it's not an anything-killer. And if you talked to reps from any of the other e-reader companies, they'd rattle off their laundry list of advantages over the Kobo. But that's exactly what might make the Kobo a winner: product confusion.

With so many big-name Kindle look-alikes on the market (not to mention a bevy of other, smaller doppelgangers like the Alex reader by SpringDesign), consumers will have a hell of a time distinguishing the respective advantages of each white plastic e-reader, even if some of those advantages are truly outstanding. The Nook, for example, allows users to read any book or magazine in Barnes & Noble's electronic library for free, up to one hour a day, as long as they're sitting in one of B&N's 700+ store/cafes. Very cool. And the Kindle can audibly read your books to you. Also cool. But even for us tech journalists who are paid to track this stuff, keeping the advantages straight is a true exercise of mental acuity.

A supplementary problem is bookstore confusion. Each e-bookstore supports its own recipe of of arcane, acronymed book formats (EPUB, PDF, AZW, TPZ) and with no clear industry standard, it's not immediately clear which one a prospective buyer should bank on. Then there's raw numbers; is more e-books necessarily better? Sony has one million titles in its store, and that includes digitized books from a consortium of public libraries around the country. Amazon boasts about a half-million titles. Nook can access one million books, magazines and newspapers, but doesn't say what the ratio is. Apple's iBooks can sell you "tens of thousands" of books. And Google, which has been toiling away for years on its Google Books project, has digitized nearly 12 million titles, most of them orphan works, and has made them available on various devices. But there's no way to know which bookstore has the kind of books you like without painstakingly shopping each.

All this confusion inevitably brings buyers back to the price of entry: an arena in which Borders wins. The company seems to know that, which is why it bundles the Kobo with 100 free e-books to get you started -- way more than any other reader. The company has also launched a price-match promotion against Amazon in its Australian market, which may end up coming to bigger markets if it succeeds. Should the Kobo gain traction, other devices will have no choice but to move to price parity -- or change their devices to be more distinctive.