Waterstones and the Kindle - Amazon's ebook dominance is not certain
Not even the most positive spin on Waterstones' partnership with Amazon Kindle can pretend that this is the ebook strategy that Waterstones would have come up with in an ideal world.But the development of a dedicated Waterstones e-reader, linked to the retailer's own digital store, would have taken too long and would have been too expensive, MD James Daunt has said. Negotiations with Barnes & Noble to sell B&N's Nook e-reader - more attractive in theory, because B&N does not compete with Waterstones as Amazon does - seem to have been unmanageable.
Nevertheless, the Amazon deal will enable ebook selling on UK high streets for the first time, and gives Kindle owners and prospective Kindle owners a reason to visit Waterstones' branches. Waterstones will get a cut of ebook sales made in the branches, and Daunt has indicated that this business will be profitable. But the chain is also selling devices that will enable readers, when they are anywhere other than Waterstones' branches, to buy from the chain's competitor. The deal will consolidate Amazon's position as the dominant ebook retailer, in part at Waterstones' expense.
Amazon has attained this position by creating a proprietory format that locks customers into buying from its store. As the Amazon store is by far the best, customers have not minded the arrangement. The hope for Waterstones and others is that this proprietory approach will go out of fashion. There may well come a time when readers decide that they would prefer ebook devices and stores that offered choice. If they do, they will loosen Amazon's market dominance.