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Sony (s SNE), which is essentially a non-player in the U.S. ebook market at this point, is cutting its losses and shutting down its digital bookstore in the U.S. and Canada, the company reported Thursday. “Sony is withdrawing from the digital reading business in the United States,” Sony spokeswoman Maya Wasserman confirmed.

The beneficiary is Kobo, which will take on Sony Reader customers and manage their ebook libraries starting in late March. Wasserman explained how the transfer to Kobo will work:

“Until the Reader Store is closed on March 20, 2014, customers can continue to shop at the Reader Store and use the Reader device. In late March, they’ll receive an email from Reader Store with instructions on how to transfer to Kobo. As part of the transfer process, Sony will send customers a link to enable them to transfer their Reader Store library and any Reader Store account credits to a Kobo account. Customers can also still download eBooks they previously purchased at Reader Store until April 30, 2014.”

More details are available in an FAQ at Sony’s site and foreshadow the customer complaints and transfer snafus that are likely to affect anyone who still uses a Sony Reader at this point. Users should note that “highlights, bookmarks and annotations you made in your Reader Store eBooks will not be available after you transfer your library to Kobo,” and “in a few rare cases, ebooks purchased at Reader Store may not be available at Kobo for re-download. In these situations, it is recommended that you download a copy of these titles from Reader Store before April 30, 2014.”

Sony Reader users abroad will not be affected, Wasserman said.

In addition, Kobo’s Android (s GOOG) app “will be pre-loaded on select Sony Xperia smartphones and tablets,” according to Sony’s official announcement, released in conjunction with its quarterly earnings. (The bigger news, from that report: Sony has sold off its PC business and plans to lay off 5,000 employees by the end of 2014.)

The news isn’t much of a surprise since Sony had said last fall it wouldn’t bother selling its new e-reader in North America, citing “the region’s market changes” (i.e., competition from Amazon (s AMZN) and, to a lesser extent, Barnes & Noble (s BKS) and Kobo). Kobo, which has a low ebook market share in the U.S. but a stronger presence in its home country, Canada, made news earlier this week when it replaced founder Michael Serbinis with a new CEO, parent company Rakuten’s Takahito Aiki.