Kobo, the e-reader and tablet company owned by Rakuten (aka Japan’s answer to Amazon), is today taking the covers off four new devices — three new Android-based Arc tablets and a new Aura e-reader. And it is using the occasion to kick off a redoubled effort to focus on a specific segment in the market — die-hard bookworms — to help itself gain an edge over Amazon and differentiate itself better in the market. Now, in addition to its catalogue of 4 million books, Kobo has built in integrations with Pocket, new reading-focused storefronts (starting with a store for children’s books and one for magazines), and two new Android feautures, a launcher Kobo calls “Reading Life” and a new Reading Mode, both designed to put reading front and center on tablets more than it has ever been done on tablets before.
“As Netflix is to video and Starbucks is to coffee, we want Kobo to be the name people think of for reading,” CEO Michael Serbinis said in an interview.
Aura E-Reader. Despite analyst speculation that e-readers are dying, they continue to be an important route to tapping dedicated customers, Serbinis tells me. “In the U.S. specifically there has been a slowdown in e-reader sales but for those who buy them we see very high purchase intent.”
And Serbinis notes that even if it sounds limiting to focus only on a small and shrinking segment of the market that are avid readers, so far this has actually paid off well in its e-reader lineup. When the company launched its limited edition, power-reader-friendly Aura HD e-reader earlier this year, sales expectations were not very high. “We thought that they would be one to four percent of sales,” he said. “The quickly became a quarter.”
If the existing Aura HD was an attempt to recreate some of the aesthetics of a hardback book experience, the new 6″ Aura launching today, Serbinis says, takes its cues from the world of tablets, with an edge-to-edge display, and at a thickness of 8mm and weight of 174g, a thinner and lighter body. Like the HD it is front-lit but without as high-resolution a screen.
New Arc tablets. Sebinis says that the three new tablets — 7″, 7″HD and 10″HD models, going on sale in October — are all multipurpose Android devices, running Jelly Bean and full of all the specs you would expect in devices like this. But like the Aura e-readers, they are built with a very specific intention in mind: targeting those who buy these devices to consume books, magazines and other reading materials. “We think there is a space for us. No tablet has really been designed for readers,” he notes.
Kobo came to this conclusion, he says, by canvassing users. “We have a lot of data from users around the world and those who download apps on our tablets read for minutes, not hours. They read once a week versus daily.” So Kobo asked its top 10,000 customers, why don’t the read on tablets? The answer, he says, was that it was too distracting. Too many alerts and other things happening on the screen, and “also they are generally too hard on the eyes, and weight is a problem. Basically, it’s pretty obvious tablets up to now have been multipurpose first and reading second.”
So Kobo decided to concentrate on these points. The screens on the HD devices, he says, are “better than Apple’s Retina display,” at up to 2560×1600 on the 10HD model. And on top of this, Kobo has developed a launcher that it calls “Reading Life.” This is essentially a user interface that sits on top of Android, that tracks what you’ve been reading, and offers recommendations for new titles to read, presented in a “Pinterest-style” scroll, he says. (It’s not an integration with Pinterest, although he doesn’t rule that out for the future. More on that below.) It’s in Reading Life that Kobo is also integrating Pocket, the app that lets users tag something online and save it to a list to read later. Swiping to the right takes you back to a “standard Android experience.”
On top of Reading Life, there is another reader-friendly service that Kobo is incorporating, which it is calling Reading Mode — essentially this is like an automatic airplane mode that you can turn on to cut off alerts from other applications, and at the same time it uses sensors on the device to optimise lighting on the screen. The third thing it does is automatically turn off all other processing functions on the device that is not needed for reading mode, also to help extend battery life. Serbinis says that Kobo has patents filed for this, and “We will be building this out as a feature on our devices” in the future.
Content. In addition to the new devices and the new reading applications, Kobo is kicking off its new strategy to present storefronts for specific reading categories. The first two coming out are for children’s literature, with 100,000 titles at launch, and magazines.
The magazine storefront, starting with “hundreds” of magazines from Hearst, Conde Nast and other top publishers, signals some other interesting developments for Kobo. It has been developed with technology from Aquafadas, a French startup it acquired last year that offers a technology for “guided” reading on magazines — essentially more tablet friendly than straight PDF renders but at the same time preserving the layout of the original magazines and therefore less like apps, Serbinis says.
I also asked Serbinis about a number of other topics, which give a bit more insight into how Rakuten, and Kobo, see their business developing in the future:
On forking. Absolutely no plans to follow Amazon and Barnes & Noble down this road, he says. “What we’ve found is that the customers looking for a device and everything that it can do. They don’t want to be shorthanded on all the things that their $199 or $299 will buy them. Theyt want access to gmail, YouTube and importantly Google Play apps. With the very first Kobo Arc we were pretty set on offering that and have not deviated. We see ourselves as a Google partner. Yes, we’ve provided Reading Life to make it great for reading but it’s open Android and upgradeable. We never went down that road on purpose.”
On Pinterest and other Rakuten holdings. This, of course, is one of Rakuten’s key, strategic investments, and Serbinis says that there are discussions with Pinterest already, but nothing concrete yet. “What makes Rakuten successful is that they’ve built an amazing ecosystem in Japan and they’re building that around the world. It’s a direction that we will support as Rakuten continues to expand, including preloaded shopping apps. It’s part of our future. When we think of some of these experiences, I’ve always thought that reading is an entry point, it’s how someone tells us, I’m interested in something. You can see the bridge from from content to commerce in that. One place you may see it first is in magazines. When you see an ad for a tennis racket in a paper magazine, you are at a dead end, but now all these tools are tappable. It’s a tap through to make a purchase or set up a demo or whatever. That kind of deeper integration is definitely in our sights.”
He notes that there are a couple of reasons why this is not there yet. “Part of this is technology and part of this is the industry catching up with tech and retooling. I suspect it’s within the next six months because the tools are now available with this launch the initial hurdle of getting that content. Now we’re through that it’s time to educate and help publishers leverage these tools to do the more fun and imaginative things.”
Wifi versus cellular? These tablets and the new e-reader remain Wifi only, he says. “We’ve talked to carriers pretty extensively and the price points are important. Offering 3g devices take you well beyond that price point and adding extra cost is not something that makes sense for us. But it’s not out of the question.” He says cellular connectivity will be important to crack certain markets. “In India you just don’t see the same kind of Wifi penetration that you do in the UK, U.S., and other countries. So 3G becomes more of an important feature to support so it’s something that we’re strongly looking at.”
Distribution. How best to battle Amazon on the retail front? Serbinis describes this task as “David battling Goliath,” and he says that the solution is “you have to leverage a bunch of friends.”
“While we don’t have the massive direct channel, we have partners that have the best book-buying and book-loving customers. For our competitor they are running out of direct channels as they expand internationally that means it’s more expensive for them.”
All the same, Kobo will be going “beyond booksellers” in the future. “We are looking to different kinds of partners, educational institutions, government and telcos. There are ways we can partner with them and being a neutral content provider is a pretty attractive thing.”
In the UK, the Kobo Aura is selling for £119.99, the Kobo Arc 10HD for £299.99, the Kobo Arc 7HD £159.99 with 16GB and £189.99 with 32GB and the Kobo Arc 7 for£119.99. Prices in the U.S. start at $150 for the 7″, non-HD tablet.
