James Daunt’s surprise announcement that Waterstones plan to release their own ereader by spring next year has led to lots of debate on the net about what they’re planning. Responses vary from the wildly enthusiastic to the distinctly sceptical, but what chance does the device (inevitably christened the ‘Wook’ by the twitterati) really stand?

First up, we must admit that we don’t know any more than that Daunt has stood up on Radio 4 and said that they are ‘well down the planning line’ on a device that they intend to challenge Amazon’s Kindle, and that he believes that they need to offer something that’s ‘substantially better’ than Amazon. That being said, there are some obvious questions, answers to which should let us decide whether this will help to save the business. After all, Barnes & Noble claim that the Nook drives a lot of business their way, in store as well as on the web.

Are Waterstones planning to create an e-Ink based device like the Kobo Touch or the Sony eReader, or an LCD tablet like the Nook Color or the forthcoming Kindle Tablet? Many suspect that Waterstones are planning to work with an existing hardware maker rather than design their own device - a reasonable assumption given the short timeline involved! Guesses vary from Elonex up to Sony, and even a partnership with B&N to licence the Nook.

Personally, I’d guess an e-Ink device from someone else, possibly their own case, and definitely their own interface. e-Ink screens are now pretty cheap - Sony, Kobo and B&N are all in the £100-150 region now, with Amazon’s Kindle only a little cheaper - and competing against the iPad is a mug's game at present. If Waterstones can produce a device for £50 with a decent feature set (wifi and touch would seem to be essential nowadays) then that could work - but can they afford to subsidise the hardware to that extent? Building a locked-down Android tablet like the Nook or the Amazon tablet is hard, and likely to go down a lot better if you have an app store, as Amazon do and Waterstones very much don’t.

Waterstones’ best bet (it seems to me) is to focus very hard on their strength, which is books and reading. For their market, a colour screen doesn’t seem essential, whereas convenience and price do. And the battery life of cheap tablets (and their weight) does count against them.

Or could they be planning something even more radical? Daunt’s comments suggest one interesting possibility to me, which is that they intend to bring the print and digital closer together in their device than we’ve yet seen. Might we see an ereader with a built-in store where you can easily buy ebook and print together? Or order a print book by itself if there’s no ebook version?

Certainly, the early adopters have been and gone. Amazon are muscling in on the mass market, and Waterstones want to displace them. Sad to say, anyone wanting to do that needs something both better and cheaper than the Kindle. Amazon’s size will give them the best prices on components, so can Waterstones compete?

One thing at least is certain. Daunt is bringing a fresh set of eyes to Waterstones, along with a clear mandate from the store’s new owners to turn things around, and he doesn’t seem to be afraid to upset apple carts. If he can do something similar to the ereader market in the UK, this could be worth watching.