Since I originally wrote this article, there have been some updates. They have been appended to the original Blog post below:

Amazon’s Kindle eReader has become a household name in several markets, the most recent one being Japan. This electronic format for reading books that employs “e-ink” rather than an LCD display is rapidly becoming a hot item on everyone’s gift wish lists. It’s not that this is a new product or anything, but as more people get on board and more publishers and authors embrace this electronic format, the more ubiquitous these portable readers become. You don’t have to tell me about the advantage to carrying around a single, lightweight, flat tablet rather than a thick, heavy, 300-page book. For travelers it’s a godsend. And I must admit, until you see what an e-ink display looks like in person, it’s hard to imagine that it could look so good. LCD and e-ink are completely different animals. And one of the huge advantages that e-ink has (and probably always will) over LCD, is the ridiculously low power consumption. E-ink does not actively draw power like an LCD display does. As a result, a newer model Kindle can go for up to a month on a single battery, whereas an iPad 2, even on a good day will give you about 10 hours before it needs to be recharged.

The main competitors in the eReader battle have become characterized by the bookstores they are meant to work with. If you’re an Amazon fan, Kindle’s your poison. Barnes & Noble? You’ll want a Nook. Sony? Wait. What? SONY? Yes, Sony has also muscled in on the action and has their own online bookstore selling digital books for their own line of Sony eReaders. Samsung has one too — the Papyrus. But I couldn’t find much about it, never mind an online bookstore that works with the product. But maybe it’s best not to criticize Samsung too much right now, as they’ve got their hands rather full being sued into oblivion by Apple in the cellphone market at the moment… And then there’s Kobo.

I have to be perfectly honest. I hadn’t even heard of the Kobo eReader until I won one as a door prize at a Catalyst MBA networking event last week. Imagine my surprise when I Googled “Kobo” and found that:

• They are a Canadian company started in Toronto (Kobo Inc.)
• Boast a huge ebook library of over 2.3 million titles
• Priced to compete with the Amazon kindle
• Affiliated with Canadian book giant Indigo Books & Music
• Hold the dominant market share of eBook readers in Canada (36%) versus Kindle’s 25% (August 2011)
• Were bought out by Japanese retail giant Rakuten in January, 2012

The last item is the one that is of particular interest and note. It’s no secret that Rakuten CEO Hiroshi Mikitani has been aggressively pursuing a policy of rapid globalization and expansion, going even so far as to mandate English as the lingua franca of intra-company interactions by 2012. And what makes their purchase of Kobo especially interesting is the timing of the buyout. Let’s consider what Rakuten stands to get for their $315 million cash deal to acquire this Canadian company.

Amazon is sharpening its talons to tear into the Japanese and Brazilian markets by April 2012. Amazon Japan is already a force to be reckoned with and is estimated to control 50% of the market share of all online book distribution in the country. Throw an eReader into an already tech-savvy, gadget-loving culture, and the results could be terrifying. It’s no wonder that Japan’s largest retailer, Rakuten wants in on the action. And what better way than to capture a small, Canadian company that’s on its way up!

While the U.S. market seems to be a three-way fight between Amazon, Barnes & Noble, and Apple, with Kobo trailing the pack, it’s hard to discount the dent that this Canadian company can still make, especially when backed by a powerhouse such as Rakuten. The real question will be, will Mikitani be able to leverage his acquisition to establish a dominant presence, not just in Japan, but in global markets — especially the ones in which Rakuten wishes to compete.

I don’t think Kobo will go anywhere in Canada for the time being. They are sitting comfortably on a nice chunk of the market share, and unless something goes horribly wrong, will likely continue to do so. If anything, there’s going to be a two-way fight between Kindle and Kobo. As for the Japanese market, a lot will depend on these two companies’ strategies and ability to woo Japanese consumers with their innovativeness and ability to cater to the quirky, Galapagos-like tastes that aren’t always understood by non-Japanese marketing departments. For instance, if I were a betting man, based on Japan’s demographics and aging society, I would be heavily pushing accessibility features that allow the vision-impaired and elderly to enjoy e-books.

Personally, I still have not decided the fate of my Kobo eReader. It sits, unopened in my house, waiting for me to figure out how I should proceed. The biggest factors for me are compatibility and price, and unfortunately for Kobo, neither make this product very appealing to me. Over the past year, I’ve accumulated a number of e-books on Kindle, not even because I own a Kindle… I don’t. But I have an iPhone with a Kindle app, a Mac with Kindle software, a PC with Kindle software, and a Chinese-made Android tablet with Kindle on it as well. Without even ever laying hands on an actual Kindle eReader, I’ve already purchased several titles that I would have to re-purchase for my Kobo. The other factor is price. Kobo’s ebooks are simply more expensive. A quick example: Walter Isaacson’s biography of Steve Jobs retails on Amazon.com for $17.49 on sale in hardcover format. I received it as a Christmas present from my in-laws, and yes — it’s a heavy, thick book. This is one tome that would make for a great ebook product. So, I can get the Kindle version for $9.99. If I want this for my Kobo, I have to shell out a whopping $21.69… And I can’t even read it on my Mac, PC, or Android tablet. Isn’t the choice obvious? I may not be a good exemplar of Kobo’s target market, but I know that I’m not the only one with these concerns. Whether I ultimately unbox my yet-unused Kobo or sell it in order to get another product (like an iPad or Kindle) remains to be seen. In the mean time, I may just wait and see what the future holds for this Canadian company, now part of a Japanese giant.

 

Update 1: So over the weekend, I decided to do something about my new, unused Kobo. The first thing I did was to take it to Hard Off to see how much they’d give me for it. A few weeks ago I took them a Nintendo 3DS I had won at a shinenkai, for which they gave me ¥10,000 (new retail price being ¥13,500). After about 10 minutes of Internet searching and a phone call or two, I was told that “of course” they would take it off my hands…. They’d give me a whopping ¥2,000 for it! Before I turned around and walked out, I told the guy that his offer was insulting. I explained that it’s a brand new, unopened item that retails for well over ¥10,000.

The alternatives at this point were simple. Either open it and use it, or sell it privately either through eBay or Yahoo auctions, or a classified ad. When I got home I did a bit more research and found some very interesting information about the Kobo.

One of their top selling features that they are quite proud of, is that when you buy books from the Kobo bookstore, you can read them on ANY device — not just a Kobo. They claim that you “own” the books you buy and can load them onto your Kindle, Nook, Kobo, iPad, whatever! Except that’s not quite true! They are trying to IMPLY that their books are being sold DRM-free, and that is simply not true. It is very much DRM-protected because you cannot simply just lend the book to a friend by loading it onto a different eReader.

But this got me thinking. If I could load a Kobo book onto a Kindle, why couldn’t I do the opposite? (Again, remember my earlier contention that since I already owned several Kindle books, I would be more inclined to trade my Kobo for a Kindle)… So while I was doing this research, I came across some compelling information about DRM-stripping and how you COULD (technically, theoretically) DRM-strip a Kindle book and then load it onto another eReader. (Note: I make no statement here on the ethics or legality of DRM-stripping. First of all, laws on this vary widely by country. And as a discussion topic it’s probably best left for another time — albeit a very good and interesting issue to talk about. When I buy a tangible, paper book, I am free to do with it as I please, but when I buy an intangible, digital book, I am crippled in where and how I use it)…

Long story short, I downloaded “calibre” — a free, open eReader software that sits on my Mac, and into whose library I can load any ebook — be it from Kobo, Kindle, Nook, etc. Then, I simply connect any eReader to it, and sync the contents of calibre’s library to my device. Easy peasy.

In the end, I decided to keep my Kobo. I unboxed it on Saturday, got some free books from the Kobo bookstore, and have been playing with it during the weekend. It’s a neat little device, and I look forward to using it on my next train ride to Tokyo, and my long haul flight to Canada. It’s nice to have something that’s so small and light that fits into my pocket, that’s really easy on the eyes to read, and where the batteries last for a month rather than 7 or 8 hours.

I think I’m pleased with my decision.

Update 2: One little thing I forgot to add in my update above… As I was researching, I was curious to find out whether the “touch” display on my “Kobo Touch” was of the resistive or capacitive variety.

For the uninitiated, there is a world of difference between the two. Resistive touch is an older technology, and relies on slight pressure on a certain spot in order to activate the selection. Capacitive touch on the other hand, relies on conductivity. This is what we see in iPads and iPhones, and what makes them so smooth to operate. The downside is that they are expensive to make and they don’t work with gloves or a stylus (unless you have something that is specifically made to work with that type of display).

I was very surprised to find out that Kobo (and Kindle Touch for that matter) use NEITHER type of display. They both use a very innovative technology coming out of Sweden, from a cellphone maker called Neonode (http://www.neonode.com/)

Their innovation is called zForce and it relies on LED photoreceptors lining the perimeter of the display, thus creating an invisible grid. When something (like a finger or stylus) interrupts any set of beams (translating to a set of x,y coordinates), the appropriate spot on the screen is selected. Like capacitive touch, no pressure or resistance is required. The advantage to this, is that it’s cheap to produce, allows multi-touch gestures, and works with all manner of stylus, gloved hands, or anything that will block a beam of infra-red light. A disadvantage is that it still isn’t quite as responsive and sensitive as capacitive touch… But for an eReader, it really doesn’t need to be. There is an excellent visual explanation of how zForce technology works on this site: http://touchscreenstoday.com/technology/zforce-an-optical-touch-screen-from-neonode

 

Update 3 (A response to a reader on LinkedIn who asked me why I would recommend the Kobo over the Kindle, and pointing out that it seemed as though the Kindle was cheaper): Different horses for different courses. Barring the fact that Kobo has the lion’s share of the market in Canada and being heavily backed and supported by Chapters Indigo Coles, I can think of several reasons why it may be worth it to opt for Kobo (other than the fact that the Kobo actually is cheaper… Read on!)

First of all, let us be 100% crystal clear on which products we are comparing. Is the Kobo really more expensive?

According to Amazon.com, current price on a new Kindle Touch is $139. (It is NOT $99 — that is an ad-supported version only available in the U.S. As a screensaver it shows you advertisements for Amazon partner products and services).

According to the Chapters Indigo website, a new Kobo Touch is $139. (For the record, Kobo also offers an ad-supported version to U.S. customers at a reduced price).

Thus, with a bit of XE.com currency-coversion magic, we find that (as of 15:49 on Feb. 20, 2012) the Kobo Touch is actually 46¢ cheaper than the Kindle Touch. In addition, if you get it from Bestbuy Canada, they have a sale on right now and you can pick one up for $119.99 at the moment.

A standard Kobo is currently retailing for $99 at Canadian retailers, and a Kindle (regular edition, non-ad-supported) also runs $99 USD via Amazon.com. And if you want a Kobo Vox (a direct competitor to the new Kindle Fire), a colour tablet, the Kobo is $179 versus the Kindle at $199.

That said, I may have been a bit unclear in my reasoning for finally deciding to avoid trading my Kobo for a Kindle, but a large part of my justification is based in Kobo’s willingness to support the open “EPUB” platform rather than insisting on proprietary formats like Kindle’s Topaz (AZW) or Sony’s BBeB… And the Kindle Fire is the only Kindle product that can handle EPUB… (More on ebook formats here: http://en.wikipedia.org/wiki/Comparison_of_e-book_formats)

By embracing EPub, open source formatting, and allowing books purchased from them to be used on non-Kobo devices gives them an advantage for my particular, personal usage and consumption patterns.

Also, Kobo has integrated social networking into their products… E.g. I can highlight a passage in a book and share it with my book club on Facebook via Wi-fi instantly… Or I can read what people are saying about a book, or even a particular page or passage in a book I may be reading. A lot of opportunity there for collaboration, especially for project managers, students, or other professionals.

Another advantage is that I can store books on microSD cards that are easily removable. That gives my Kobo the ability to store 30,000 books! Not that I can see using that up anytime soon, but I can see the logic in having different themed libraries… E.g. an SD card with only scfi. An SD card with only law reference books… etc.

In addition to all this, Kobo has started incentivizing purchases in 2012 by offering monthly free books to its customers.

You can get more info than you could possibly handle just by going to Google and typing in: “Kobo or Kindle.” Articles from ZDNet and PC Advisor all give their opinions on which makes the better device and why. But many reviewers rate the Kobo very positively. Wired Magazine chose the Kobo as their #1 pick for 2012. Lately, even many UK customers have been joining the fray. http://www.telegraph.co.uk/technology/reviews/8911014/Kobo-eReader-Touch-review.html (Note, this review talks about a higher price, which may have been true for the reviewer, but as I pointed out above, is not true at the time I write this).

http://canada-ereaders.com/the-big-shoot-out-kobo-touch-vs-kindle-wi-fi-in-canada/http://www.bitterwallet.com/could-the-kobo-be-a-genuine-uk-rival-for-the-kindle/51811

But for every positive review I can post just as many negative as well. So in the end I think it comes down to personal preference. Although for THIS consumer, a bit of Canadian pride at owning a Canadian device DID play a role. 🙂