Microsoft, Barnes & Noble strike e-book partnership

Redmond investing US$300 million for 17.6 percent equity stake in unnamed Barnes & Noble subsidiary, which will include latter's digital and college businesses.
Written by Kevin Kwang, Contributor

U.S.-based books retailer Barnes & Noble has announced the formation of a "strategic" partnership with software giant Microsoft to create a new subsidiary, which is yet to be named.

According to a Microsoft press release issued Monday, Redmond will be investing US$300 million in exchange for a 17.6 percent equity stake in the new entity. Barnes & Noble will own approximately 82.4 percent of the new subsidiary, and will include the company's digital and college businesses.

"The partnership will accelerate the transition to e-reading, which is revolutionizing the way people consume, create, share and enjoy digital content," the release stated.

Microsoft pointed out that one of the first benefits for customers will be the Nook application for Windows 8-based devices, which will extend the Barnes & Noble's digital bookstore to millions of Windows customers in the United States and internationally.

Additionally, the inclusion of Barnes & Noble's college business is an "important component" of the subsidiary's strategic vision, as it allows the retailer to tout its Nook Study software to students and educators on the back of Microsoft's siginificant presence within the education sector. 

Redmond had earlier in April landed its largest cloud customer in the form of the All India Council for Technical Education (AICTE), deploying the company's Live@edu cloud service to over 7 million students and nearly 500,000 staff members in the coming months.

"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 William Lynch, CEO of Barnes & Noble, in the press release.

As for the patent litigation Microsoft initiated against Barnes & Noble for its Android-based Nook readers in March last year, the software giant said that both parties have "settled their patent litigation". Barnes & Noble, and its new subsidiary, will now have a royalty-bearing license for its e-reader devices.

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