Kobo enters tablet market

With the release of a cheap new tablet device, Kobo Inc. is bringing its Vox to the populi.

The Toronto-based maker of the electronic book readers is entering the increasingly-crowded market for cheap tablet computers, releasing a touch-screen, colour device that runs on Google Inc.’s Android operating system. The device allows for e-reading of books, magazines and newspapers, and also allows users to watch movies, listen to music and play video games such as Angry Birds, like they do on other tablets.

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Its price point is low – $200 – in a competition with Amazon.com Inc. and Apple Inc., which has so far dominated the tablet market with its highly popular, but higher-priced, iPad. Amazon unveiled its own lower-price table, the Kindle Fire, in late September. It, too, runs on Android and sells for $200 (U.S.)

“There are a lot of different needs in the market,” said Kobo chief executive officer Michael Serbinis. “We’re going after a customer that’s a reader first, and wants to consume all kinds of media.”

Several observers had declared the e-reader all but dead at the beginning of this year. At the tech industry's annual showcase event in January, the Consumer Electronics Show, all the talk was about tablets, and almost everyone expected the new multimedia devices to erode e-reader sales.

But that was before e-reader manufacturers began turning the tables by adding more functionality to their devices and slashing prices dramatically.

Now heading into holiday season, those manufacturers are getting into the tablet game. So far, no other tablets or e-readers have proven to be much competition for Apple's iPad. The lone exception was an anomaly – when HP sold off its TouchPad tablet in a fire sale after it discontinued the product, and consumers responded positively because of the low price.

“They’re going to sell a fair number of these things at Christmas time,” Kaan Yigit, president of Toronto-based Solutions Group, said of the Kobo Vox.
“Two years for now, nobody will be selling one-trick pony e-readers … [Kobo has] a substantial portion of the e-reader market in Canada, but they have zero in the tablet market. That’s the one that’s growing.”

That growth is making room for a new class of tablet devices, similar to the role that Windows-powered personal computers filled in the 1990s. While Apple had a well-designed, lauded product, it was expensive. The Windows operating system offered a computer that was relatively easy to use and, crucially, less expensive than Apple’s.

The popularity of the Android platform in powering smart phone devices and its open design also means that developers are willing to work with its system. There are already tens of thousands of applications for Google’s Android store. Other iPad-chasers such as Amazon’s and the Sony Tablet, also use Android. On Wednesday, Netflix Inc. announced it was updating its Android app to work on the newest operating system – used by Kobo’s Vox – and to make it available for the first time to users in Canada and Latin America.

Apple's stranglehold on the tablet market is even stronger in the corporate sector, where businesses will likely stick to the iPad for the near future, said Duncan Stewart, the director of Deloitte Canada Research, who specializes in technology, media and telecommunications. On the consumer side, however, he said Amazon's new, low-cost tablet might quickly make a dent in the market.
“It appears unclear what percentage of the total market it'll make up,” he said, “but the Kindle Fire may rapidly become second most popular.”

The WiFi-enabled Kobo Vox is also chasing that market. The device opened for pre-orders on Wednesday and will be available in stores starting Oct. 28.
“This is a dynamic, exciting and evolving market,” said Heather Reisman, chief executive officer of Indigo Books & Music Inc., Kobo’s majority shareholder. (Ms. Reisman is also the chair of Kobo Inc.) “This is a multi-purpose device but designed from the reader point of view … There is a desire to have it at a lower price.”

Kobo currently sells its e-readers in 100 countries, meaning that it has built brand awareness in markets that will help it push out its new device, Mr. Yigit said.

“Is there room in the market [for a new tablet]? For players with reasonable brand awareness, yes,” he said. “The tablet market is like the colour TV market in its second year or something. You knew eventually everyone would have one but at the time, everyone was huddled around just a few devices. … [A cheaper tablet] has tremendous potential. The timing is terrific.”