Microsoft and Barnes & Noble Inc. have joined hands to announce a strategic partnership – A B&N subsidiary, provisionally referred to as Newco. After the patent dispute between the two companies last year, this surprising new venture aims to focus on e-reading and the education market while burying the patent litigation apparently.
B&N will own 82.4 percent of the new subsidiary and Microsoft will make a $300 million investment to hold a 17.6 percent stake in the company. Newco, will bring together the digital and College businesses of Barnes & Noble. B&N’s NOOK Study software is a leading platform for distribution and management of digital education materials to students and educators, and Newco would aim to extend this reach. The alliance would also bring about a NOOK application for Windows 8 bringing Barnes & Noble’s digital bookstore to hundreds of millions of Windows customers worldwide.
As the two companies move forward as allies, there are few things which aren’t answered in the press release and the commentary around it:
- While the two companies closed on the alliance, how was the patent dispute tabled and settled? Would Barnes & Noble and/or Newco pay royalties to Microsoft on every Nook sold?
- While Windows 8 tablets are expected to have a NOOK application now, and this might extend to the next version of Windows Phone, would there be a Nook tablet or e-reader running, maybe, Windows RT to participate in the market against Kindle and Kindle Fire?
- While Microsoft has less than a fifth stake in the venture, would the reach of Windows platform make Nook Microsoft’s card in competition with Amazon and Apple in the e-reading market?