An adventurous guy in Italy opened up his Kobo Glo and discovered everything resides on an internal 2GB microSD card!
Click = big
He provides detailed instructions on how to swap out that microSD card with one of larger capacity. It’s not an operation most people will try. It will also likely void the device’s warranty.
The internal card trick was also used in the first generation Nook.
This makes me wonder if the Kobo Aura HD has the same thing.
Italian: Kobo Glo – Smontaggio e aumento memoria interna
Google English: Kobo Glo – Disassembly and increased internal memory
Mike Cane’s xBlog 
We won’t know for sure until the FCC embargo lifts in May, but I bet that it does have the internal card slot. The Arc has one too, and all 3 devices were probably developed by Netronix.