The Bookseller has reported that Borders has secured $550 million of funding from GE Capital, contingent on publishers also providing $125 million. Borders says it does not rule out bankruptcy, and that publishers are “extremely reluctant” to take notes instead of missed payments. (I find it hard to blame them.)
According to Publishers Weekly, publishers turned down a request by Borders for another meeting. They seem to be notably skeptical about Borders’s future, and I find it hard to blame them. It may be time for publishers to cut their losses—there is such a thing as throwing good money after bad.
On the SabDesi blog, an article from trading site Benzinga points out that e-books have a lot to do with Borders’s failure to keep up.
Where did Borders go wrong? Nearly identical competitor Barnes & Noble is not going bankrupt, and there is still room in the market for booksellers like Amazon, so why is Borders struggling so much? The issues seem to stem from Borders’ inability to keep pace with technology and consumer demands. Barnes & Noble responded quickly to the Amazon Kindle with the Nook series. According to The Street. IBIS analyst Mary Gotaas says Borders simply sold the Sony and Kobo e-readers instead of developing its own product. Gotaas also says it was a mistake for Borders to abstain from e-commerce, as the company allowed Amazon to handle its online sales. On the other hand, Barnes & Noble created its own system for internet sales. The last mistake Gotaas cites is that Borders did not begin its own internet sales until 2010, whereas Barnes & Noble began its internet sales in 2009.
It’s not clear yet how Borders’s failure could affect Kobo, apart from depriving it of its best known retail chain.
