Borders Attempts to Compete with Kindle Through Kobo E-Reader

New e-reader from Borders will have trouble competing with Kindle and Nook

   

Borders Attempts to Compete with Kindle Through Kobo E-Reader

Borders Group, Inc. (NYSE: BGP) refuses to go gently into that good night. As the embattled bookseller skirts bankruptcy after over three years of precipitous declines, they are clinging to what remains of their business, begging for what scraps of the book retail market are left behind by Amazon.com (NASDAQ: AMZN) and Barnes & Noble (NYSE: BKN). In addition to Borders’ plans to open a number of temporary retail outlets in small cities throughout the holiday season, the company is launching their own e-reader device as a competitor to Amazon’s Kindle and Barnes & Noble’s Nook devices.

The device actually sounds like a quality machine on paper. Borders claims that its Kobo Wireless e-reader, releasing on November 1st at $139.99, offers longer battery life, a sharper screen, and faster performance than both the Kindle and the Nook. It will offer access to a store library of 2.2 million e-books. It will come pre-loaded with 100 free e-books and have 1GB of memory. It will not have 3G wireless communication support like the Kindle and Nook, opting for Wi-Fi communication only. The Kobo has actually dropped in price since it was initially announced last June, going down to $139.99 from $149.99 to put it on equal footing with the recently released Wi-Fi only model of Amazon’s Kindle.

For any of Borders shareholders clinging to their devalued shares after prices declined 95% over the past half decade, don’t hold any high hopes for Borders’ chances in the e-reader market. Leaving alone the looming threat to e-reader technology from tablet computers made by Apple Inc. (NASDAQ: APPL), Dell (NASDAQ: DELL), Research in Motion (NASDAQ: RIMM) and Samsung (LSE: SMSN), Borders is entering into a market that has grown overly crowded and fiercely competitive in the past twelve months. Amazon’s new Kindle models released this past summer have, according to the company, been selling faster than all previous models combined. The Kindle also has a strong retail presence thanks to recent agreements made with Target (NYSE: TGT), HMSHost Airport (BIT: AGL) stores, and Staples Inc. (NASDAQ: SPLS). Barnes & Noble’s Nook has an automatic upper hand thanks to retail placement at Best Buy (NYSE: BBY) not to mention the relative strength of their own brick and mortar retail spaces compared to Borders’. The Kobo will even have trouble competing against poor-selling but more established brands like Sony‘s (NYSE: SNE) line of e-readers, the Pocket, Touch, and Daily Edition, all of which have received fresh redesigns and price adjustments in the past three months.

With no significant features to distinguish itself from the competition and a merely comparable price point, Borders’ Kobo should be DOA when it release on November 1st. Investors with weak stomachs following the e-reader should avert their gaze prior to the slaughter.

As of this writing, Anthony Agnello did not own a position in any of the stocks named here.

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Article printed from InvestorPlace Media, http://investorplace.com/2010/10/borders-attempts-compete-kindle-kobo-reader/.

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