The announcement that Waterstones, the nearest UK equivalent to Barnes & Noble as a bookselling chain, will be selling the Kindle in their stores came as somewhat of a shock.

There had been rumors that B&N was closing in on a deal to partner with Waterstones on the Nook.

The difficulty in making deals around a reading device and supporting ecosystem is that the sales of content subsidize the sale of the devices. It’s all part of a total equation around the “lifetime value” of the customer. The device-supplier really requires the ebook sales to make the device sale profitable.

So when Kobo did their deal with WH Smith in the UK (and FNAC in France) last Fall, it made sense to me why they’d do it rather than Waterstones. At that time, Waterstones was saying they’d deliver their own device.

Knowing what B&N has had to spend in development to make the Nook work across a store and revenue base several times as large as Waterstones, that always seemed like a very heavy lift. It wasn’t a surprise when Waterstones kept missing delivery dates for its device nor when the rumors shifted to them doing a device deal with somebody else. Since Kobo already was working with their biggest competitor, the logic said it had to be Nook.

I don’t know anybody who predicted it would be Kindle.

Michael Cader in Publishers Lunch reads the press releases the same way I do and we both get the message that the only ebooks Waterstones will share revenue on are those that are purchased over Waterstones’ in-store wifi network. (That network doesn’t exist yet; it’s being built now which is why they won’t start selling Kindles for a few months yet.)

Cader quotes Tim Hely Hutchinson of Hachette as being “fully supportive” of the deal. Since his two biggest customers have just joined forces, I can imagine that his private thoughts might be a bit more troubled than his public pronouncements. (When presented with lemons, make lemonade.) But I wouldn’t pick a public fight with my biggest sources of revenue, either.

How will Waterstone’s benefit from this deal? Well, they’ll make some margin on the Kindles they sell. They won’t make much selling ebooks if the only ones they’re paid for are the ones transacted in their stores. I’ve seen some speculation on an email list that they’ll use the Amazon connection to get more promotional money from publishers, but since they’ve already kicked up discounts considerably, I’m not sure how much blood is left in that stone.

It would be bad practice to criticize a deal when one has no idea about the details. And it could be that Amazon made Waterstones an offer that it would have been crazy for Barnes & Noble to try to match or for Waterstones to turn down.

But it is hard to escape the conclusion that this arrangement will accelerate the British public’s move to ebook reading and, at the same time, strengthen what is already the strongest book retailing platform. Amazon’s commanding share of the online print market and their share of ebooks can only rise from the commanding levels (often referred to as 90%, but I don’t know if that’s accurate) they now hold.

Waterstones’ claims that they will both be growing their online print business and delivering their own ebook store might indeed be sincere, but they are almost impossible to take seriously.