James Daunt, the man holding the Waterstones reins, has correctly identified the Kindle as the ereader that UK readers want. But is it really a good idea to sell them in his stores? After removing the Sony ereaders from their stock, I expected them to start selling at least the Nook and at best a Waterstones-branded ereader linked to their own ebook store. But the Kindle? Isn’t Daunt shooting himself in the foot?
I don’t think so.
Cards on the table: selling the Kindle is a massive short-term loss for Waterstones. It will actively disconnect readers from their own ebook store; those ebooks are sold in the open EPUB format, which isn’t supported by the Kindle. Rather than converting files and illegally stripping DRM, customers will buy from Amazon instead. But it will provide Waterstones will two very important things.
Revenue and reprieve.
The best scenario for Waterstones is to have its own ereader, one that can truly rival the Kindle and bring customers back into the fold. Daunt has admitted that Waterstones is late to the game and that an ereader couldn’t be ready until next Christmas.
But why wait until then to take advantage of the hardware revenue? Selling Kindles means they get a cut of Kindle sales. That’s more than they were getting before. And instead of wasting time on second best, they’ll be selling what everyone already wants. So Waterstones starts earning more revenue.
It also buys Daunt some breathing space. Instead of rushing an ereader to the market and playing catch-up, Waterstones can properly plan and execute a strategy. The lost ebook customers aren’t too much of a worry; technology has an expiry date by its nature. Customers will be quick to drop their Kindle when it’s overshadowed by a superior newcomer. Revenue and reprieve will allow Waterstones to build that shadow.
At first glance this deal looks a lot like a little white flag raised to Amazon. But I suspect that it’s part of a bigger, longer game.