Borders' E-Reader Poses Little Threat to Apple, Amazon

By Mike Schuster May 10, 2010 1:30 pm

The price may be low, but you get what you pay for with the new Kobo.

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Bargain hunters and latecomers to the e-reader game appear to have been given an entry-level device to whet their e-book appetites, but buyers would be wise to wait or select a different e-reader before pre-ordering Borders' (BGP) Kobo device.

Last Friday, Borders announced it will be taking pre-orders for its Kobo e-reader, which is set to launch next month on June 17. As indicated from the blurb on the homepage, courtesy of the Wall Street Journal, at $150, the Kobo "is considerably cheaper than other eReaders. The design aims to make eReading more accessible to book lovers." While the word "considerably" applies to Apple's (AAPL) iPad and the popular $260 duo -- the Amazon (AMZN) Kindle and Barnes and Noble's (BKS) Nook -- the Kobo is no cheaper than Sony's (SNE) Pocket Edition Reader, which sells for under $150 at Walmart (WMT) and Walgreens (WAG).

The Kobo is lightweight, includes 1GB of memory -- expandable with an SD card -- and is compatible with Adobe (ADBE) DRM, but as a whole, it's a very stunted device.

Opting for a four-way directional pad, the lack of a keyboard or touchscreen turns searches and navigation into a hunt-and-peck endeavor. Graphically, its e-ink screen is maxed out to eight levels, whereas the Kindle 2 features 16 levels, making for a far sharper display. And worst of all, the Kobo isn't equipped with 3G or wi-fi connectivity. Titles are loaded via USB cord and Kobo software for Windows (MSFT) or Mac OS, or through a Bluetooth connection and "select smartphones."

Although Borders' e-book apps are available for iPhone, Google (GOOG) Android, Palm (PALM) Pre and BlackBerry (RIMM) devices, the Kobo E-Reader FAQ only makes mention of BlackBerry compatibility. So universal connectivity isn't yet known. And if the only wireless transfer of documents requires a smartphone -- one that can display the files as is -- it's time to redesign your e-reader.

Borders intends to sway new buyers by including 100 free e-books pre-installed on the Kobo, but as far as exciting amenities go, that's about it.

Speaking with the Associated Press, senior trade analyst at Simba Information Michael Norris said, "Even though Borders is playing catch-up with its peers, I like that they're pursuing the value angle with the low price point." But rumor has it that Barnes and Noble is already developing a "Nook Lite," which will feature wi-fi and sell for $199. PCWorld's Harry McCracken also speculates Amazon will unveil a Kindle closer to Kobo's price range.

In other words, a $150 bare-bones device will likely see competition from more feature-rich e-readers soon. Bargain hunters won't have to trade essential features for a few extra bucks.

Borders shares have ebbed and flowed over the last year -- peaking at $4.48 last June and sinking as low as $0.85 in January of this year. The chain has flirted with potential buyers since March 2008 and shuttered numerous locations to improve profitability. The company desperately needs a savior, but the Kobo won't bring forth a resurrection.Twitter: @mcs212