Waterstones is the only big player left in books on the British High Street. The immediate reaction has been one of shock and disbelief. Many seem to think that the arrangement is great for Amazon, terrible for Waterstones.
James Daunt, Managing Director of Waterstones, said: "At Waterstones, we are committed to improving our bookshops quite radically to offer the best possible book buying experience. It is a truly exciting prospect to harness also the respective strengths of Waterstones and Amazon to provide a dramatically better digital reading experience for our customers.
"The best digital readers, the Kindle family, will be married to the singular pleasures of browsing a curated bookshop. With the combination of our talents we can offer the exceptional customer proposition to which we both aspire."
Jeff Bezos, Amazon.com Founder and CEO, said: "Waterstones is the premier high street bookseller and is passionate about books and readers - a dedication that we share deeply. We could never hope for a better partner to bring together digital reading and the physical bookstore."
The pessimistic take is that Daunt appears to be inviting book buyers to browse his bookshops, then buy what they like the look of on their Kindle. This may well be why the chain is investing heavily in coffee shops. People will want to buy a coffee while they are at Waterstones. They may not be buying books.
The really surprising thing about the deal is that Daunt has made it clear in the past that he isn't an Amazon fan. The Telegraph reported comments in December in which he likened the Internet behemoth to Old Nick himself.
Most of Twitter seems to have decided that this is a terrible one. But perhaps it is inevitable. Most ardent readers will embrace the Kindle in the same ways as people embraced paperbacks: as an inexpensive, convenient medium to read books. The challenge for the likes of Waterstones but perhaps even more so for the publishers, is to stay relevant in this new arena.