Rakuten Kobo Acquires Deutsche Telekom’s Tolino Shares, Antitrust Approved
Note: An earlier version of the article stated that Rakuten Kobo aimed to take over the Tolino brand. However, the correct information is that the Tolino shares held by Deutsche Telekom were acquired. Consequently, Rakuten Kobo becomes another partner within the Tolino alliance alongside Thalia, Weltbild, Hugendubel, and Libri, and is responsible, among other things, for the technical implementation.
Update from January 21, 2017: After the acquisition of the Tolino technology partnership detailed below was reported to the German Federal Cartel Office at the beginning of January 2017, yesterday the positive confirmation for the deal arrived: Rakuten is allowed to take over the Telekom shares.
The President of the Federal Cartel Office commented on the situation as follows: “The Tolino platform holds an important market position in the e-book market in Germany alongside the market leader Amazon. The acquisition by Rakuten does not pose any competition concerns. Although Rakuten is a significant global player, in the e-book sector in Germany, the company has so far been a rather small competitor.”
In particular, during the years 2015 and 2016, Kobo lost more and more ground in this country. By the time the 300 ppi Kobo Glo HD was discontinued without an adequate successor, it became clear that the Canadian eReader specialist was being pushed out of the mainstream segment—not just in Germany, but globally.
Therefore, the market situation in Germany is barely changed by the takeover, as also communicated in the press release: “The Tolino e-readers are the second most sold e-readers in Germany after the Amazon Kindle, but this market position will only be slightly strengthened by Rakuten/Kobo.”
As a customer, one can be curious about how the technical partnership between German booksellers and Rakuten Kobo will work in practice. Especially regarding the launch of new models, Kobo frequently faltered. Most recently, this happened with the Kobo Aura One, which was unavailable during the crucial Christmas shopping season.
We can only hope that Rakuten not only takes over the technology partnership but also brings in its distribution expertise.
Update from January 6, 2017: In the meantime, the deal described below was confirmed in an official press release. Some of the outstanding questions were answered in this.
By the end of January 2017, Rakuten Kobo will be the new technology partner of the Tolino alliance. This role was previously held by Deutsche Telekom, which was responsible for the technical implementation of the Tolino eBook Reader and cloud solution.
The sale of the Tolino share by Telekom (to Kobo) was supported from the beginning by the book trade partners Hugendubel, Thalia, and Weltbild, according to the announcement.
“Readers, booksellers, and publishers in Germany will benefit from the future merging of the best from the Tolino world and the Kobo world under the Tolino brand,” says Weltbild. The Tolino brand will remain, and the current devices will continue to be supported according to the press release. For customers, nothing will change (for now).
In contrast to the handover of Sony customers to Kobo, Tolino customers will stay with their respective (German) book retailer.
Practically, the eBook Reader selection will become smaller in the future. Although there will continue to be Tolino eReaders in Germany, they will likely only be newly branded Kobo devices. Presumably, future Tolino and Kobo models will be identical in design and offered with different names depending on the market.
Technically, not much will change for customers, because the devices already come from the same manufacturer: Netronix.
However, it remains unclear what software changes will occur in Kobo or Tolino and which user interface will be preferred.
Original article from January 2, 2017: After the past year 2016 was relatively calm in the eBook market apart from small peaks, there might be some of the most significant changes in a long time in 2017. Not necessarily with reading devices, but in the competition dynamics between Amazon Kindle and the other competitors.
As announced today, on December 22, 2016, a review process (file number: B6-82/16) for the acquisition of “essential assets” of Deutsche Telekom was initiated by the Federal Cartel Office. More precisely: Rakuten (parent company of Kobo) wants to buy the Tolino shares from Telekom.
The cartel office now has one month to decide on the matter. If there are no objections to the deal, nothing stands in the way of the acquisition.
Tolino or Kobo Ecosystem?
If it really comes to that, customers can be excited about how the German eBook market will develop, particularly.
Besides Deutsche Telekom, several other companies have been significantly involved in the success of the Tolino brand. Tolino Media (formerly pubbles) supplies the Tolino ecosystem with content and is held 33 percent each by Thalia and Bertelsmann and one-sixth each by Weltbild and Hugendubel.
Practically, this means for the customer that the eBook readers come equipped with the retailer’s shop from which they were purchased. However, the libraries of the Tolino partners can easily be linked and synchronized on the reading device thanks to the shared infrastructure.
In contrast, Rakuten Kobo relies on a partnerless shop implementation in Germany. This has resulted in their eBook readers not being accessible through any bookseller despite years of activity in Germany and only being available in electronic stores. This might change in the future.
Who will be responsible for eBook distribution will have to be seen. One can assume that the German booksellers do not want to relinquish control over the content.
Two Brands, One Name
The rebranding of the Kobo happened rather quietly. The Kobo logo was preceded by the red Rakuten “R” and the eBook business is now operated by “Rakuten Kobo Inc.”
It is unlikely that Rakuten will run two digital book brands alongside each other in the future, and this will probably not be particularly efficient in the long term. Kobo is a little more internationally known than Tolino. Additionally, the eBook business is still actively run by Kobo from Canada. Therefore, it only seems logical that the Tolino brand will eventually fall under the Kobo umbrella.
However, it must also be said that, despite good brand recognition, Kobo has not been able to gain significant market share in the major international markets. The German bookstore association has been much more successful in a shorter period, showing how to put pressure on the main competitor Amazon. Perhaps a breath of fresh air with a new name and German expertise might not hurt the rest of Rakuten’s eBook business…
eBook Readers Still on Android?
For many tinkerers, the question of the future Rakuten-Kobo-Tolino eReaders’ operating system might also be interesting. After all, the latest Shine and Vision models have distinguished themselves with excellent customizability and are popular among modders and hobbyists thanks to root options.
Kobo devices can be extended to a limited extent, but ultimately they do not offer the same flexibility as the mobile Google operating system.
In terms of user-friendliness, Kobo and Tolino do not differ too much. Both systems are quick and easy to use. Some things work better here, others there.
In terms of user-friendliness and data protection, Tolino devices have the upper hand, as they can be used without compulsory registration. How this will be in the future remains open.
No Technical Cuts
Technically, there will be no special changes. Both Rakuten and Deutsche Telekom have their eBook readers manufactured (and presumably largely developed) by Netronix.
Since the devices already come from the same factory anyway, a Tolino takeover will not bring any technical changes in the future. E-Ink Carta, blue-light-reduced lighting, and great contrast values are already available from both companies.
Only the eReader portfolio might change again at Kobo. Recently, the Japanese-Canadian company has increasingly withdrawn from the mainstream segment and possibly replaced the Kobo Glo HD due to competitive pressure with the technically inferior Kobo Aura 2.
The Tolino partners were much more successful here, managing to occupy lower price segments with the various Tolino Shine and Vision generations and compete with Kindle models.
Less Competitive Pressure
Although there will be no technical cuts, the potential Tolino takeover is not only to be viewed positively. Even though in most eBook markets the competition is de facto divided between Amazon and usually only one other provider, the competitive pressure will undoubtedly decrease by the elimination of an internationally active company.
This would ultimately leave only Amazon and Rakuten as the big players. Besides that, there would only be Barnes & Noble Nook (exclusively in the USA) and PocketBook, along with various Chinese manufacturers (Boyue and Onyx) with numerous small resellers around the globe.
This is anything but pleasing from a customer perspective, especially regarding the price development of hardware. For the past two years, eReader prices for new releases have shown a clear upward trend. If two large companies divide the market among themselves, this situation will likely worsen.
For now, however, we must wait and see what changes the takeover—if it goes through—will genuinely bring. Subsequently, the effects will be visible and evaluable in the next one to two years.
