Notwithstanding all of this, the corporate has managed to keep up a high profile inside the e-reader space, because it did this week, when between the announcement of the Nook Tablet and the discharge of the Kindle Fire , it let the sector know that it were acquired by Rakuten , something of an similar to Amazon in its native Japan. The announcement followed the bankruptcy and subsequent closure of once giant bookstore chain Borders earlier this year, a corporation to which Kobo had long been closely tied. In a conference call last night, Serbinis denied a connection between these events, insisting instead that the deal just made good business sense for the Canadian company.
How will the deal affect Kobo? Does this move ultimately impair Serbinis’s ability to border his 200-odd person company’s battles as an old testament fight against corporate giants? Or does this simply offer just a little assistance in its sometimes uphill push for market share? We sat down with the chief to speak about the purchase, the crowded tablet space and the way forward for e-reading.
How long has the purchase been inside the works?
We first met the Rakuten team in the summertime and we mentioned other ways lets partner, and during the process researching them and them discovering us, it really struck us that this was an excellent fit and an easy way to accelerate our growth going forward. So it has been a few few months.
What forms of opportunities does the deal present for Kobo?
We’ve been competing on a shoestring against Goliaths with billions on their balance sheet. Now we have now a Goliath backing us.
Well, Rakuten have gotten over 50 million customers worldwide, they’re the #1 commerce player in Japan — i feel they’re four or five times the scale of Amazon there, and they have been making acquisitions worldwide, really growing their national footprint. So, it provides us with financial muscle. We’ve been competing on a shoestring against Goliaths with billions on their balance sheet. Now now we have a Goliath backing us. It gives us reach. We will expand internationally quicker. We’ve always had the location of being a worldwide player, and now we will just get there faster. There is a lot we will be able to do at the social front between our Reading Life platform and Rakuten’s commerce properties around the globe.
Amazon’s strategy have been to offer a tool for the bottom possible price and use it as a platform with which to deliver content. Is that such a strategy which you guys are staring at as you progress ahead with this acquisition?
It’s absolutely been our strategy from day one. After we introduced our first e-reader, the Kindle was $300. We were the 1st to introduce a reader at cost with our first Kobo reader in May of 2010. We brought it to the marketplace for $149 — 1/2 where everyone else was at. It’s our way of getting a rich reference to our customers so that it will consume content. For us, the business is ready the content, and the device is only a good way to attach customer and content.
You’ve cast Kobo as a David amongst Goliaths. Does the Rakuten deal impact that underdog perspective?
Two-thirds of the worldwide book market is outside North America. I plan on getting an immense share of that two-thirds.
One of many things that attracted us to Rakuten is their philosophy relating to their group of businesses. Kobo’s going to continue to run as an independent entity based here in Toronto, operating globally. All that actually changes is that i’ve got some new shareholders and a brand new board, but we continue to run our play internationally with financial muscle and geographic reach where we’d like it. Obviously, Japan’s a very good market, being the second one largest economy on the planet. We’d haven’t any space but to be number 1 in Japan with Kobo and e-reading.
There’s new markets like Brazil which are exploding from an e-commerce standpoint, and many these markets will not have the Seattle-centric e-commerce player. We’re working with the number 1 player in a win-win relationship and we will own 50-percent of the market.
Globally?
We will be able to dominate, on a rustic-by-country basis. Two-thirds of the worldwide book market is outside North America. I plan on getting a tremendous share of that two-thirds.
Were you looking for a deal like this? Obviously things changed for the corporate a little bit after Borders shut down.
The change in Borders was a little a setback. We partnered with Borders, but we also partnered with Best Buy, Target, Walmart and we’re now in a number of alternative retailers. Unfortunately, Borders didn’t exercise routine. We’ve recently partnered with Facebook. We are the only e-book partner to deeply integrate with it within the ticker and timeline. MOG and Rdio have doubled, tripled and quadrupled their user bases since working with Facebook, so we predict to be a player inside the US. There’s multiple thanks to skin a cat, and look, there isn’t a ensure that Barnes & Noble has the money to run their play.
You’ve suggested that the closure of Borders didn’t impact the verdict to sell to Rakuten.
The Borders situation was an unfortunate one, however it had zero to do with this.
Yeah, the Borders situation was an unfortunate one, however it had zero to do with this. Officially Kobo wasn’t on the market, and this wasn’t a situation where we said, “there goes the united states now that Borders is gone. Time to sell the corporate.” That was absolutely not the location. We had a great number of strategic options in front folks, and when our board came to a conclusion that it wasn’t purely about cash and raising cash, it was about winning the sport and to win, cash was a bit of it, financial muscle to back us was a chunk of it, but so was reach and e-commerce expertise and actually having the ability to connect into an overall global commerce platform. So that they were the very best fit. That was what really drove without equal sale. Indigo as a majority shareholder wasn’t seeking to add to their balance sheet through a sale. It was really a superb opportunity.
Kobo has obviously expanded into the tablet space recently (with Vox ). How for much longer will the devoted e-reader space be a viable one?
I absolutely see the e-reader space being viable. It is going to be the lion’s share of our sales this year. We’ll see about next year, but what’s clear is that there are customers and segments of the population who wish to concentrate on an awesome reading experience and do not desire to be connected to apps and music and everything else. Then there’s any other readers, a few of them casual. A few of them would like to be connected and wish a colour experience and are okay with the various benefits and contours that a tablet style device brings. i actually see the tablet as more of expanding our market and allowing us to succeed in new forms of readers, in addition new price points that are important to our retail offering.
So the Vox tablet is more the logical extension of the reader experience, in place of a completely different space?
As we checked out the spectrum of shoppers and their desire for other kinds of content, we felt that it was a must-have to bring a colour device that gave the reader with the connected life an exceptional affordable product. Now where does that bring us going forward with Rakuten? The chances are endless.
You’ve spoken about how stiff the contest is within the e-reader market. You’re contending with Amazon and Barnes & Noble in North America and Sony in Japan. However it appears like the tablet space is even harder to crack into at the moment. Everybody’s got a tablet at this point. What are you guys bringing to the table?
At the beginning of 2010, I went to CES, and there have been 200 e-readers. We’d just launched, and that i thought, “Wow, we have got to execute out of our minds to achieve success” — and we did. So, i glance on the tablet space now — round the end of last year there have been imagined to be some great hopes entering the market, and them all chose us to be their e-book partner. Whether it was Samsung, the PlayBook (which was delayed and at last came out), Acer, Asus, HP. The collective market cap is within the hundreds of billions, or even even towards trillions, and none of them were successful to this point. What that tells you is that the core electronics under the hood are being commodified, and it’s really in regards to the overall experience and bringing the content to the client.
This idea that your library, your content goes to be with you forever, however the device will come and go, and also you pick up where you left off, whether it is a page of your book or your overall music library, the instant you stir up your new device. That’s been a core a part of our strategy from the start and we’ve proven that we are able to run faster cycles to launch these products than our competition. We get well and stronger anytime, and meanwhile guys like Samsung and RIM have really struggled to make a dent in what iPad has done.
Amazon entered the tablet space round the same time, and the hearth also appears an extension in their e-reader, similar to the Vox.
This complete idea of the 383rd Harry Potter review being what moves me to make a purchase order has gone the style of the dodo.
Whenever you analyze this globally, we all know that it isn’t going to be a one-horse race within the majority of the sector. Amazon is not the player there that they’re inside the US. Secondly, we partner on a rustic-by-country basis with a number one player that’s got the handiest book-loving customers and develop a win-win relationship. After which, thirdly, we believed from the beginning that discovery of content and the way people connect and express themselves around that idea is fundamentally going to modify. This complete idea of the 383rd Harry Potter review being what moves me to make a purchase order and browse a book has really gone the style of the dodo.
Are you able to give numbers on the subject of what percentage readers were sold this year?
We do not disclose the numbers at the hardware but i will inform you that from a user base of folks downloading and purchasing books on a weekly basis with Kobo, we’ve gone from just north of two million on the end of Christmas last year to simply shy of 6 million in the present day.
Has the Touch reader become your hottest device?
The Touch reader have been a very good seller this year, but we’re now per week or two into Vox, and we’re probably going to expire sooner or later before Christmas.
Kobo currently has three devices in the marketplace — the Vox, the Touch and the former generation reader. Is that going to stay a comfy number?
What’s really secret’s having a lineup so they can reach your different segments of your customer base, and value point is some extent of that, usage profile is some extent of that. i am not sure it’s as much the number up to it’s whatever we have to reach the purchasers that we wish to attract to Kobo. Again, going country by country makes for a more complicated answer, but three to 5 devices within the next year is among the right range.
So there are new areas opening up inside the reader space which you haven’t quite hit yet?
Yeah, there is a ton of opportunity. There’s categories that actually haven’t even been touched yet. Kids is a good example. Kids sub-12 and adolescents — there’s great opportunity in those categories. There’s opportunity for college kids, and there is opportunity for various form factors.
‘Hugo’ director Martin Scorsese, cast explain some great benefits of shooting movies in 3D (video)
The Engadget Interview: BlackBerry PlayBook product manager Michael Clewley
