It's been widely reported during the past week that Borders, the Ann Arbor, Michigan based bookstore chain that was once one of the largest in the US, is facing the spectre of possible bankruptcy. Among the key factors leading to the decline and downfall of the company was its late recognition of the move toward Internet shopping and more recently, the growing popularity of e-books.
Amazon.com began to aggressively pursue online book sales beginning in 1995, and released its first Kindle e-reader in 2007. Competing brick and mortar bookstore chain Barnes & Noble launched a web site in 1997 and developed its own e-reader, the NOOK (which was released in 2009). Borders, however, never seemed to have a coherent strategy for either online sales or e-books. The company farmed out its online operations to Amazon.com for seven years beginning in 2001, and invested in Kobo in December, 2009. With the last move, Borders had its own e-reader to sell in-store (although it also continued to offer competing models from Sony and Aluratek), apps that would allow its e-books to be read on popular mobile devices and Kobo powered the company's e-book store as well. However, being last to the party meant a lot of ground had to be made up and it appears that the effort may have been too little, too late.
If the company is unable to secure financing and is eventually forced into bankruptcy, it could take quite some time for proceedings to be completed and at this point, no-one knows for sure what will happen to the company. The bottom line in terms of the e-book industry is that any outcome which diminishes the relevance of Borders will likely benefit competitors, both in terms of e-book formats and e-reader sales. Barnes & Noble, Amazon, Apple and Sony all stand to pick up some market share at the expense of Kobo. With the likelihood of fewer stores selling the Kobo e-reader (Borders and Walmart are the key retail locations for the Kobo e-reader), and the possibility of customers being spooked by buying e-books from a troubled retailer, the troubles at Borders definitely have the potential to impact Kobo. The good news for Kobo e-reader owners is that their device is compatible with ePUB format e-books, so there are alternatives to Borders should things take a turn for the worse.
In the meantime, this developing story bears watching and you can bet that Kobo is making plans, even as the other big e-book retailers circle.