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Kobo’s Aura is one of the most expensive e-readers, and not that far removed in price from entry-level tablets.

As the company behind Canada's most popular electronic book readers prepares to launch a new e-reader, a pressing question remains: Who's still buying them?

Kobo Inc. announced its new device, the Aura – a larger, more powerful e-reader than its current offering – on Monday.

Once a fast-growing segment of the mobile device market, e-readers have slowly lost steam among consumers over the past couple of years. According to research firm IDC, e-reader shipments have been declining steadily since 2011, but that decline was especially steep last year, in large part because a host of low-price, multipurpose tablets hit the market at the same time.

"In 2012, you started seeing lower-price tablets coming into the market that were very well-branded and well-marketed," said Krista Napier, senior analyst for mobility at IDC Canada. Ms. Napier pointed to tablets such as Apple's iPad Mini and Google's Nexus 7.

As the price gap between e-readers and tablets closes, more consumers are opting to buy devices that can perform multiple tasks, rather than act only as digital books. In a recent IDC Canada consumer survey, 31 per cent of respondents who owned or planned to buy a tablet said they would no longer buy an e-reader because they felt their tablet would replace it.

Still, e-readers have maintained a very loyal niche following, especially among older people who simply want a way to read lots of books with one device. E-readers tend to have vastly superior battery life when compared with tablets, and the e-ink screens are generally regarded as being much easier on the eyes and better-suited for reading.

For this reason, Deloitte Canada analyst Duncan Stewart describes the declining e-reader sales as "a slope, not a cliff." But because many of the e-reader's most well-liked features are relatively immune to improvement, he adds that a lot of customers tend to stick with their e-readers for a long time, rather than paying for a new and improved version.

"There is almost no upgrade cycle."

But with the Aura, Kobo hopes to convince customers to upgrade by launching a high-end e-reader and capitalizing on its 12 million registered users. The company's devices are the best-selling e-readers in Canada, according to IDC – in large part because of Kobo's well-established distribution network throughout Indigo and Chapters bookstores. (Through a media handler, Kobo refused a request for comment).

Packed with a one-gigahertz processor and a 6.8-inch screen, the Aura is perhaps the most computationally powerful e-reader on the market. At $170, it is also one of the most expensive, and not that far removed in price from entry-level tablets such as the $200 Nexus 7.

"To us, the Kobo Aura HD is the Porsche of eReaders and is designed for those in the driver's seat of their eReading adventures," Wayne White, vice-president and general manager of devices at Kobo, said in a statement.

But it is not yet clear whether e-reader customers are interested in more powerful devices, given the single-use nature of most e-readers.

"The number of things that you can do from a technical perspective have already been done," Mr. Stewart said. "It's almost the perfectly engineered device – for the things it does, there aren't a lot of obvious improvements."