Microsoft is getting into the ebook reader game, in a manner of speak, with a US$300 million investment in the Barnes & Noble Nook. The investment will give the Windows maker a 17.6 percent stake in a new Barnes & Noble subsidiary for the Nook business, and will lead to Windows 8-based Nook ebook reader app, too.
The deal follows a patent infringement battle where Microsoft accused Barnes & Noble of using technology it owns and controls in the Nook ebook reader without proper licensing. As part of the settlement, Barnes & Noble gained a royalty-free license to use the patents in question in its ebook reader and tablet products.
B&N plans to consolidate its digital business and College business under the new subsidiary company while promoting the Nook ebook reader.
Microsoft invests in Barnes & Noble Nook
“The formation of [the new subsidiary] and our relationship with Microsoft are important parts of our strategy to capitalize on the rapid growth of the Nook business, and to solidify our position as a leader in the exploding market for digital content in the consumer and education segments,” said Barnes & Noble CEO William Lynch.
He added that the planned Windows 8 Nook reader app is expected to help expand the company’s presence in the digital book market. Currently, B&N’s Nook app is available for iOS and Android, but not Windows.
B&N’s deal with Microsoft could help the book retailer better compete with Amazon and it’s popular Kindle ebook reader product lineup and Apple’s iPad. What’s more likely, however, is that B&N will take some marketshare away from Amazon while the iPad maintains its top player position.
Regardless of where the growth comes from, B&N is counting on its deal with Microsoft to push up numbers. “Microsoft’s investment in Newco, and our exciting collaboration to bring world-class digital reading technologies and content to the Windows platform and its hundreds of millions of users, will allow us to significantly expand the business,” Mr. Lynch said.