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Indigo is a reasonably well run enterprise, led by passionate book people with a nose of business. Running a book chain these days is among the more challenging spaces to play in; and Q2 is the "softest" season for bookstores. Launching Kobo in May was probably an excellent idea since the product can gain some legs before heading into the fall buying season. Kobo is a drain to launch, but the investment isn't actually huge in dollar terms.
Presumably, Indigo will have taken away strong learnings from the early Kobo sales and will work hard to maximize its sales (and profits) heading into the fall. The hardest thing will be to wrap corporate minds around the notion that sales of Kobo leads to more revenue stream through Kobobooks and this is an opportunity to win back share from other players, like Amazon, rather than see it as taking away from in-store sales.
Something will have to give on the hardware pricepoint heading into the fall but quite what that is remains to be seen. What's the magic price in store? $149? $128? $119? As long as Kindle doesn't support Overdrive library books, Kobo has a serious talking point when it comes to heavy book buyers. And, Kobo needs to "stay in the face" of consumers at Indigo (and possibly Wal-mart) -- something Amazon's online only Kindle cannot do.
Mileage may vary outside of Canada.
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