Waterstones (UK biggest bookseller) to sell Amazon's Kindle book reader

[stonetools]

We maybe overthinking this. Maybe Amazon just offered Waterstones a huge chunk of cash.
Waterstones can do a lot with that, from investing in its print book business to going into selling other lines of merchandise. It may just be that being a B&M store selling books alone can no longer a profitable business anymore. I don't like that conclusion at all, but it might just be realistic- use books as a loss leader to get customers into your store, then sell other higher margined stuff to those customers. Works for Amazon!

[fjtorres]

Originally Posted by HarryT

It's worth noting that Waterstones already has a pretty decent ePub bookstore.

I'm not sure who else is doing epub business in the UK, fighting over the 20% non-Kindle market; there's Sony, Kobo, Waterstone's and...?
Is iBooks' share measurable there?

Waterstone's share of the total market is... what? 5%?
The costs might not be justifying the results, which in many businesses is a sign to outsource or exit. Especially if growth is not guaranteed.

They may have better uses for their resources.
Indigo thought so, Books-a-Million in the and Half-Price Books in the US, think so. Maybe B&M bookstores don't need to migrate to digital bookstores *right now* to survive, after all.

[ProfCrash]

That was part of my point. An E-PUB store does little for them if Mobi is the dominant format.

[CommonReader]

Originally Posted by avantman42

My understanding is that having a monopoly isn't illegal, but abusing the power that the monopoly gives is. If Waterstones & Amazon (or even if one of them alone) has 99% of the market, that's OK. If they use that domination of the market to the detriment of customers, then they can be prosecuted under anti-trust laws.

As I say, that's my understanding. I may be wrong.

I am aware of the legal situation in the UK but in most European countries it is illegal to form a cartel that dominates the market.

Originally Posted by Kali Yuga

From not doing any marketing, from not selling ebooks, from not needing to integrate book delivery to an existing website, and not needing to send 100 physical devices to every Waterstones store, to sit on the shelf until someone buys one.

How much money are they actually saving here? Unless they spend big on marketing they aren't going to see huge sales for the Kindle either. They are just one of many places where the Kindle is being sold, after all. If Waterstones' staff couldn't sell Sonys, then they can't sell Kindles either, unless Waterstones invests into training, marketing etc.
How much money would it cost to take an existing reader like the Pocketbook Touch and implement some Waterstones branding and set the existing Waterstones epub store as a default? One million GBP would be an exceedingly generous estimate.
What Waterstones has done here is akin to asset stripping. Generate quick profit - in this case by selling your access to customer to the highes bidder - but suffer the disadvantages for a long time to come. As it happens this strategy is completely opposite to the one pursued by Amazon itself.

[murraypaul]

Originally Posted by CommonReader

How much money are they actually saving here? Unless they spend big on marketing they aren't going to see huge sales for the Kindle either. They are just one of many places where the Kindle is being sold, after all. If Waterstones' staff couldn't sell Sonys, then they can't sell Kindles either, unless Waterstones invests into training, marketing etc.

Kindles sell themselves.

How much money would it cost to take an existung reader like the Pocketbook Touch and implement some Waterstones branding and set the existing Waterstones epub store as a default? One million GBP would be an exceedingly generous estimate.

And why would any more people buy that than bought the Sonys, or are buying the Kobos? People want Kindles.

[elcreative]

Originally Posted by CommonReader

I am aware of the legal situation in the UK but in most European countries it is illegal to form a cartel that dominates the market.



How much money are they actually saving here? Unless they spend big on marketing they aren't going to see huge sales for the Kindle either. They are just one of many places where the Kindle is being sold, after all. If Waterstones' staff couldn't sell Sonys, then they can't sell Kindles either, unless Waterstones invests into training, marketing etc.
How much money would it cost to take an existung reader like the Pocketbook Touch and implement some Waterstones branding and set the existing Waterstones epub store as a default? One million GBP would be an exceedingly generous estimate.
What Waterstones has done here is akin to asset stripping. Generate quick profit - in this case by selling your access to customer to the highes bidder - but suffer the disadvantages for a long time to come. As it happens this strategy is completely opposite to the one pursued by Amazon itself.

What gives you the idea that Waterstones couldn't sell Sonys... they sold EVERY one that they got (apart from the odd dud), they just ran out because Sony failed to supply them...

And I'm sure that if you can implement the use of an existing model with branding, support and stocks etc for a mill then why not prepare a detailed business plan and send it in to Daunt... if it's so good for a mere million then I'm sure he'll be totally impressed with your business skills and not only put your plan into force but offer you a job as a senior exec as well...

[ProfCrash]

Outside of the US, Sonys are still too expensive. I keep seeing people post that they bought a Kobo because they did not want to pay the extra 50 pounds to buy a Sony. At some point in time, Sony will learn this lesson. Unfortunetly it will be far too late.

[fjtorres]

Originally Posted by CommonReader

I am aware of the legal situation in the UK but in most European countries it is illegal to form a cartel that dominates the market.

Waterstone's and Amazon aren't cartel-ing: they are cooperating in digital while still competing in print. (It's called coopetition.)
That is perfectly legal in most jurisdictions.

That fact that they will still be competing in print is why some think this is a bad idea for Waterstone's.

[fjtorres]

Originally Posted by murraypaul

Kindles sell themselves.

And a whole lot of other things: ebooks, magazines, newpapers, audiobooks, and (for the SO Kindles) TVs, cosmetics, DVDs, and pretty much everything else in the Amazon online catalog.

One more time: us folks 'round here aren't even vaguely representative of the typical ebook buyer. To a lot of people, reader = Kindle. Everything else is "just" an imitation.
Likewise, to a lot of people any tablet is an iPad...
Life isn't fair and first movers get a lot of extra mindshare for free.
(shrug)

[CommonReader]

Originally Posted by elcreative

And I'm sure that if you can implement the use of an existing model with branding, support and stocks etc for a mill then why not prepare a detailed business plan and send it in to Daunt... if it's so good for a mere million then I'm sure he'll be totally impressed with your business skills and not only put your plan into force but offer you a job as a senior exec as well...

You probably just forgot to add the that are usually attached to your posts that you consider as being hilarious. Guess what, poor strategic decisions aren't a rare thing in the business world. However, if going with the Kindle is supposed to give a quick boost to the balance sheet so that the current investor can sell Waterstones off to the next investor at a premium, then the decision may make sense...

Originally Posted by ProfCrash

Outside of the US, Sonys are still too expensive. I keep seeing people post that they bought a Kobo because they did not want to pay the extra 50 pounds to buy a Sony. At some point in time, Sony will learn this lesson. Unfortunetly it will be far too late.

No, they aren't. The Kindle Touch costs 129 € while the Sony usually costs 139 - 149 €. The Kobo undercuts both at 99 € but the Kobo's price drop is very recent.

Originally Posted by fjtorres

Waterstone's and Amazon aren't cartel-ing: they are cooperating in digital while still competing in print. (It's called coopetition.)
That is perfectly legal in most jurisdictions.

Well, perhaps you are well versed in competition law. However, as far as I am informed this is usually not legal if the cooperation leads to dominance in the market where the companies cooperate. After all, using your very argument the agency 6 agreement should be perfectly legal as well.

[elcreative]

Originally Posted by CommonReader

You probably just forgot to add the that are usually attached to your posts that you consider as being hilarious. Guess what, poor strategic decisions aren't a rare thing in the business world. However, if going with the Kindle is supposed to give a quick boost to the balance sheet so that the current investor can sell Waterstones off to the next investor at a premium, then the decision may make sense...

Why would you consider that hilarious... you made a statement, I took it at face value and was being absolutely serious, that's why no

I only use when I consider the original and comment require it but you were so straightforward in your assertion that I thought Waterstones would be seriously interested in your plan...

[fjtorres]

Originally Posted by CommonReader

After all, using your very argument the agency 6 agreement should be perfectly legal as well.

The Price fix six *secretely* coordinated to *raise* retail prices and prevent retailers from competing. They are in court for the conspiracy, not for the agency pricing.

Waterstone's is openly announcing they will be fronting Amazon's ebookstore in return for a commission. Given that Waterstone's ebook share *before* the deal was, apparently, insignificant there is no real *ebook* competition change.

Not every corporate deal is competition sensitive.

(Of course, you can always go ask a UK solicitor for a legal opinion if those facts aren't compelling enough. )

Edit: In the past few months, the UK ebook market has seen Google and Sony set up shop and B&N announce they are going to follow suit. With the big sharks moving in, competition is going to fiercer and it is inevitable that the smaller players are going to get squeezed out. Waterstone's chose to get out while the getting is good. I still see no reason to doubt their judgment.

[stonetools]

From the comment thread on Shatzkin's post on the issue:

BTW I'm not as gloomy about this as Mike. Waterstones becomes the first non Amazon bookseller to get between the Kindle customer and the Kindle store -- if Daunt's promise of a Waterstones browser is true. While the skepticism is very valid it rather reminds me of the talk about Pottermore before it actually launched, and then we all said 'wow, that's clever'. Might something happen here too? Seems unlikely based on all the evidence presented so far, but never say never

What exactly would have a Waterstones browser mean? How would that help? Anyone?

[fjtorres]

Originally Posted by stonetools

What exactly would have a Waterstones browser mean? How woould that help? Anyone?

Sounds like the Waterstone's Kindles might default to a branded/reskinned ebookstore rather than the regular Kindle store. Or maybe the built-in browser will connect to the Waterstone's home page.

Doesn't really matter: Amazon will be providing the ebooks and paying Waterstone's a commission. That is the deal.
The rest is plumbing that we'll know more about in Sept.

We don't even know what Kindle hardware is involved; it could be a co-branded reader for all we know. Lots of cheap and easy options to use the Waterstone's brand to front a Kindle.

[CommonReader]

Originally Posted by fjtorres

The Price fix six *secretely* coordinated to *raise* retail prices and prevent retailers from competing. They are in court for the conspiracy, not for the agency pricing.

This "conspiracy" thing is an American concept that is mostly alien to other jurisdictions, unless we are talking about terrorism or mafia related crimes etc.
The EU is conducting a probe whether Apple and the publishers entered into agreements with the objective or the effect of restricting competition. For being illegal it is not relevant if they did so openly or secretly. (It may be relevant for the fines that are being imposed, though.)

Originally Posted by murraypaul

Kindles sell themselves.
And why would any more people buy that than bought the Sonys, or are buying the Kobos? People want Kindles.

No, some people want a Kindle. Others are somewhat interested, don't know the difference etc. That's the moment when you would have to actually sell the product and that's when the sale usually falls through. Sales staff of book shops tends to be rather poor at actively selling something and they are even worse when it comes to explaining the technical aspects of setting up the reader. Staff in electronic stores usually aren't people who exude a huge enthusiasm for the book angle of the reader.
Do you recall when the Internet was new and just turned into a mass market product with most people accessing via dial-up? The ISPs distributed CDs and DVDs with programs that installed the connection. That's what book shops require: give people e.g. an usb stick with a little program that leads them step by step through the set up. It's the simplicity that is the Kindle's great advantage and competing products do have to be comparably simple.