The smaller players are always going to struggle just because of name recognition -- would you buy an electronic device from a company that might well disappear tomorrow? Of course the stronger names will do better, which is why Amazon, Sony, Apple, B&N have a chance. The Kobo exists because of Borders (or Whitcoulls over here) and that gives it a kudos that a no-name will never have. At least we stand a good chance that we *could* take a Kobo back and the store will still be there next month.
But I think you're right about the price. In NZ the Kobo has it easy (there is no alternative book reader available). But one of these days someone's going to bring out a cheaper one with similar features (or at least with the battery/power issue fixed). I'm waiting for someone to bring out a plain-jane large-screen model using the new Kindle display but without all the 3G/Wifi/keyboard/bezel width nonsense. I want to read books, lots of books, on a lightweight small reader with the largest possible screen size. But of course I don't want to be tied to any one online method of vaguely renting books, so it would have to be able to read epub and pdf files (which a larger screen should be able to display reasonably well). I'm sure we'll get these one day, but I'm concerned that companies are trying to build in more and more features instead of just sticking with the basics.