Monday, March 28, 2011

The wrong cut

So HMV looks increasingly likely to sell Waterstones.

They would be selling the only part of the business with a potential long term future. There may (or may not) be a future in retailing books, but there surely is not one in retailing CDs and DVDs. As planned purchasing migrates online (where its easier, cheaper and there's a bigger range in stock), then the remaining opportunity is for impulse purchases. I still buy books, for example, in railway stations and airports. But books have built-in functionality that HMV's products do not. There's an HMV at the airport, but what is the point of buying a CD when I've no way, while in transit, to get it onto my iPod; or a DVD, when my netbook doesn't have a DVD drive. Far easier to simply download something (and cheaper, too).

We may eventually do most of our reading on Kindles (who knows), but even if we do, we'll still be able to pick up a book out of convenience. No such future awaits the CD. It may make sense, in the short term, to sell Waterstones - given Waterstones poor performance and HMV's losses. But you wouldn't want to be left with a stake in HMV.

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