Microsoft and Barnes & Noble have this morning announced a "strategic partnership" on e-reading, focused on the creation of a new B&N subsidiary that will spin off that company's digital and College businesses. The final name of the new business has not yet been determined, but it has been revealed that Microsoft is investing $300 million for a 17.6 percent stake. Among the first benefits of that cash injection will be a Windows 8 Nook application, which has been announced as part of today's press release.
Provisionally referred to as "Newco," the co-owned subsidiary will continue to have a close relationship with Barnes & Noble's retail store chain. B&N's educational operations are said to be "an important component" of the makeup of Newco, with the parent companies keen to spread and popularize Nook Study software for students and teachers alike. Microsoft's Andy Lees welcomed today's news by pointing out that the two companies' "complementary assets will accelerate e-reading innovation across a broad range of Windows devices." As far he's concerned, "we’re at the cusp of a revolution in reading," and Microsoft and Barnes & Noble are taking the steps to move us forward.
In our recent breakdown of digital ecosystems, it was apparent that Microsoft lacked any real strategy to compete in the e-reader business, so this alliance with B&N makes an awful lot of sense. Steve Ballmer and company now have a strong library of ebooks to distribute with Windows 8, plus another device maker that could potentially ship tablets running Windows RT.
All of this goes to show that no matter how heated legal disputes between companies get — and Microsoft and B&N spent a good part of last year arguing over Android-related patents — business reasons can bring them into partnership just as quickly as they can drag them into court rooms.