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The Nook Color was very popular in the U.S. when it was released last year, particularly among women. I think both Kobo and Amazon saw this, realized there was a market for this type of ereader, and decided to pursue it. It also gave Kobo the opportunity to issue children's books and cook books that are much more attractive on a color ereader, and market to those who wanted a device to read magazines on.
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