The Sony Reader Store’s parent company, Sony Corp. of America, which is the U.S. headquarters of Tokyo’s Sony Corp., put a positive spin on the news with the Feb. 6 headline, “Sony Selects Kobo to Bring its World Class eBookstore to Sony Readers in the US and Canada.” Ken Orii, VP of Sony’s digital reading business division, noted that Sony and Kobo both sell ebooks in “open formats so people can easily read anytime and anywhere. … Our customers can be assured that they will have a seamless transition to the Kobo ecosystem and will be able to continue to access and read the titles they love from Sony devices.”

The Reader Store blog also posted an announcement on Feb. 6 that includes an FAQ, and Kobo has already created a welcome page for Sony customers.

Customer Concerns

The Reader Store blog post announcing the decision now has almost 400 comments, with a mix of positive and negative reactions. Besides the understandable worries about the transition process, recent comments include praise for as well as complaints about Kobo.

Khawaja writes, “Sony was OK, but having used both, I prefer Kobo.”

Marylou disagrees: “I opened my Sony [account] because of a bad experience with Kobo. I have purchased numerous books through Sony and have no complaints. My account is now closed, I will not return to Kobo!”

“I too have been a loyal [Sony] customer for a long time and was very happy with the reader and the service provided. Now I have to start over and learn a new process. Not very happy!!” Carol writes.

bokchoi responds, “Buying from two different stores [Sony and Kobo] probably means you should look at a good ebook management software, (like the free and awesome Calibre), but that’s the only hassle. I have personally found Kobo’s prices to be cheaper on average. This is not the end of your ebook library, or being able to use your readers, cats and dogs will not begin living together, this is not Armageddon.”

All joking aside, commenters have valid concerns that Sony has been quick to assuage. Reader Store account holders can opt out of the Kobo transfer, but those who decide to go ahead with the migration can expect an email from Sony sometime this month explaining the transfer process to new or existing Kobo accounts. Ideally, no customers’ ebooks will be lost in the transition, but if that happens, customers can redownload their purchased ebooks from their Reader Store accounts. Customers can still read both downloaded Sony and newly purchased Kobo ebooks (by transferring files via USB to their devices) on their Sony products; Sony plans to roll out a software update, scheduled for May 2014, that will allow customers to purchase Kobo ebooks directly from their devices. Also, certain Xperia devices will now come preloaded with the Kobo Android app to facilitate purchases.

Industry Reactions

Bloggers are weighing in on what Sony’s closure might mean for Barnes & Noble’s (B&N) NOOK business. Forbes’ Jeremy Greenfield writes, “This could be a good model for Nook … While it still brings in over $100 million in revenue every quarter, it loses much more than that and revenues have been shrinking rather than growing.” He wonders who would be willing to take on the NOOK, citing Apple, Kobo, Microsoft (which already owns part of the NOOK business), Google, or Samsung as possibilities. Greenfield noted that Amazon is not a likely candidate: “I suspect it would be a merger that would invite much antitrust scrutiny as they are the Nos. 1 and 2 booksellers in the U.S.”

Nate Hoffelder responds to Greenfield’s argument that B&N might abandon the NOOK in a post on The Digital Reader, saying, “That’s a terrible idea and it is also wildly improbable, but as much as I might hate it I am afraid it might actually happen.” He explains that Sony didn’t sell out; it simply gave up on the U.S. ebook market and “on their way out the door they asked Kobo to take in the soon to be orphan customers (Sony’s last friendly act of customer service).” Hoffelder believes that B&N could decide that its financial loss outweighs the negative publicity of folding and give up on its NOOK business. He doesn’t think Apple or Amazon would take on NOOK customers, but Kobo might if Amazon doesn’t “do their best to block regulatory approval for a B&N-Kobo deal.” Hoffelder agrees with Greenfield that Microsoft is a logical choice to take over the NOOK. “[I]f B&N simply abandoned their Nook customers to [Microsoft] I think most of those customers … would go running to Amazon,” he writes. “In short, if B&N followed in Sony’s footsteps Amazon would come out a huge winner.”

Mike Shatzkin, writing on his blog The Shatzkin Files, speculates, “If B&N were really forced to choose between the investments they need to make in their stores and the investments required to compete in digital delivery, it would be hard to see them making any other choice but to save the stores.” He compares Sony with B&N, Apple, and Google, whose ebook businesses complement their other endeavors. “But if the ebook play ever fit into a larger objective for Sony, it is not clear what that was. … Sony has found that it doesn’t fit for them, almost certainly because it doesn’t add value to any of their other businesses.”

Smashwords, an indie distributor that partnered with Sony in 2009, published a blog post from founder Mark Coker: “Any time any retailer closes—especially one such as Sony who pioneered the ebook market—it’s a sad day. … [W]hen the history books of the indie author revolution are written I hope historians give Sony the credit they deserve as a true pioneer.” He explains that the Reader Store’s closure will not have much impact on Smashwords, because it’s one of the smaller stores to which Smashwords distributes, and because Kobo is already a Smashwords partner. Smashwords sales levels at Sony have tended to remain flat in the past 4 years, while sales from other retailers have grown. “So although the loss of Sony is inconsequential from an author sales perspective, it provides a cautionary reminder that it’s in every author's best interest to foster a diverse and thriving ecosystem of multiple ebook retailers,” Coker writes. “Ultimately, the retailers that indie authors support and promote are the ones that will survive and thrive in the future.”

Sony’s Next Steps

Sony sold its first e-reader in the U.S. in 2006, before Amazon introduced the Kindle, and it was a major player in the ebook market for a time. However, the Reader Store’s closure doesn’t come as a surprise. The eBook Reader.com website announced Sony’s decision not to sell its new e-reader, the PRS-T3, in the U.S. in September 2013, and a month later, the site reported on Sony’s removal of the e-reader section from its online store. “Deep down I was secretly hoping that Sony would surprise everyone and announce a frontlit Sony Reader for the US market in time for the holiday season. … But now with the ereader section removed entirely and all the previous Sony Readers listed as discontinued, it looks like Sony is leaving the US ebook reader market for good,” the post predicted.

Sony is restructuring not only its ebook business but also the rest of the company. It plans to cut 5,000 jobs in Japan after a $1 billion annual loss, and in the U.S., the company intends to close 20 of its 31 retail stores in 13 states. Sony will abandon the personal computer market and instead focus on digital imaging, video games, and mobile devices.