Microsoft and Barnes & Noble Partnering On E-Book Company

Nook-B2Microsoft is making a $300 million investment in a new Barnes & Noble subsidiary that spins off that bookseller’s digital content and college businesses. As yet unnamed, the new company will be valued at $1.7 billion and is designed to “accelerate the transition to e-reading,” the companies said in a statement.

All of the components of the new subsidiary were not entirely clear in the statement, which emphasized the educational aspects of the company. Apparently, the new company will include the Nook tablet and e-reader aspects of the company. The two firms did announce that a Nook app for the upcoming Windows 8 operating system was forthcoming. The company also will distribute Nook Study software to the education market.

Microsoft and B&B had been involved in patent litigation over Nook products, but those suits have been settled. The new company will license the relevant patents to the Nook readers and tablets from Microsoft. There was also some indication in the announcement that the new subsidiary could be spun off entirely as a separate business.

The strategic partnership gives both Microsoft and B&N greater purchase in markets currently dominated by rivals Apple, Google and Amazon. Microsoft’s upcoming windows 8 operating system is designed to work across tablet and desktop platforms, but the company is up against the entrenched dominance of Apple’s iPad. Likewise, B&N’s Android-powered Nook Tablet seems to have been overshadowed by Amazon’s Kindle Fire. 

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