Most of you are familiar with the razor and blades strategy: Give away or sell the razor below cost to ensure years of profitable razor blade sales. We had a great example of this at AlliedSignal (later Honeywell) Aerospace where we pretty much gave Boeing the brake assemblies for the aircraft plus a free spare plus I think we put some cash in the box as well, all to get decades of guaranteed high price brake replacement business (courtesy in part to government regulation which made is extraordinarily difficult to the point of being impossible for anyone else to produce aftermarket parts).
So what I don't understand is, why is this company proposing to sell only the razors while inevitably leaving the blade sales to someone else:
The UK's biggest bookstore chain has announced that it will start selling Kindles alongside other digital services from Amazon. Waterstones stores will let Kindle owners digitally browse books in-store and link up with special offers, tying into the chain's plans for substantial renovations that would also include dedicated digital book areas and free WiFi.
One buys the books right from the Kindle interface. I understand the issue that browsing books online is less satisfying than in a book store (but much more convenient), but I am not sure how they are going to make money. Are Waterstone Kindle's coded to give Waterstones a share of each purchase? I can't find anything like that in the media reports, but I would certainly demand that at Waterstones. If not, this is like selling gift certificates for your competitor.
I will confess to being a book store free rider. I shop airport book stores but if I see something I like, pull out my iPad at the gate and buy it. Yes, I understand the appeal of physical books and it frankly pulled at me for years. But having just gone on a trip with 100 pages to read in the third Game of Thrones book, the relief I felt in having both the third and fourth books on my iPad rather than carrying both physically (think 800 pages or so each) was great.