It's a good time to avoid investing in bloodied booksellers, but their battle remains interesting to watch from afar. Borders Group (NYSE: BGP) launched its Kobo e-bookstore last week, aiming to make headway in the digital market.
With Kobo's help, Borders will peddle e-books on its website. Interestingly, Borders has set the ambitious goal of reaching 17% market share by 2011. Barnes & Noble (NYSE: BKS) recently said it currently has 20% of the e-book market.
Through its relationship with Kobo, Borders seems to be pursuing the "ease" and "discount" segment of the e-book market. The Kobo e-Reader costs $149.99 -- until recently, a fairly cheap price tag.
But Barnes & Noble recently lowered the Nook's price tag to $199 from $259, and then launched a WiFi-only version for the same price as Kobo. Amazon.com (Nasdaq: AMZN) responded swiftly, cutting Kindle's price from $259 to $189. Sony (NYSE: SNE) slashed its entry-level e-reader price to $149.99 as well.
These breaking developments are bad news for Borders, since Kobo was considered a cheaper, no-frills e-reader. Now rivals' products (with more features!) are selling for comparable prices. The next stage may be that Borders pursues bargain hunters by offering rock-bottom prices on its titles, which wouldn't be good for the bookseller's margins. (It might not go over so well with some publishers, either -- just ask Amazon.)
Borders has already been offering compelling e-book deals. Last week, I received an email from Borders' mailing list, proclaiming, "Learn How to Go Digital. IT'S EASY!" As a Kindle owner, I'd vouch for its ease of use; perhaps Borders is trying to lure outright technophobes. Then again, Kindle recently started showing up on Target's(NYSE: TGT) shelves, which makes getting ga Kindle a pretty low-tech endeavor.
Needless to say, Apple's (Nasdaq: AAPL) iPad is still a formidable product in the e-book reader market. Some even believe tablets may make dedicated e-readers obsolete.
You could argue that this push is better late than never for Borders. Ignoring the growing e-book market would have been suicide. Then again, Barnes & Noble's recent downer quarter may suggest that duking it out in the digital realm is little more than an expensive battle to the death for big-box booksellers. I'd still say "buyer beware" regarding Barnes & Noble and especially Borders right now.
Who'll rule the e-book business? Take our poll, then explain your choice in the comments box below.
