The companies announced the venture, which joins Barnes & Noble’s digital and college businesses, on Monday. Microsoft will invest $300 million into the new business for a stake of 17.6 percent, and will incorporate a Nook app into Windows 8.
The new company does not yet have a name and, currently, is referred to in the release and other documents as “Newco.”
In a conference call with analysts, Barnes & Noble chief executive William Lynch said that the deal will extend the Nook bookstore to “hundreds of millions of people” in the U.S. and worldwide.
The new venture focuses in part on the education space — a market that Apple has aggressively pursued by teaming up with textbook publishers for content on the iPad. Barnes & Noble has several bookstores on college campuses, which will help the companies get their education content in front of students who may want to opt for a $100 Nook rather than a $400 iPad.
Microsoft president Andy Lees said on the call that this partnership will help kick off a revolution of digital reading.
The deal also resolves a patent dispute between the two companies over the Nook’s use of the Android platform, according to the release announcing the new venture. Microsoft announced in March 2011 that it had taken legal action against the bookseller, saying that Barnes & Noble owed licensing fees for Microsoft patents used in the Android platform.
These included user interface patents including: “natural ways of interacting with devices by tabbing through various screens to find the information they need; surfing the Web more quickly, and interacting with documents and e-books.”
On the call, Lynch said that the Nook’s use of Android “doesn’t really relate to this partnership at all,” emphasizing that this is a content partnership that does not have an effect on the Nook device itself. He also said that analysts and investors should have “no concerns” that the bookseller is looking to separate itself from its retail operation.
Lynch and Lees said that the deal also opens the possibility that Microsoft products may be sold in Barnes & Noble stores in the future — bolstering Microsoft’s growing retail presence — but were clear that no such deal was in place.
“The promise we’re making to consumers is that you’re going to be able to read your Nook books” across a number of devices,” Lynch said, adding that Microsoft and Barnes & Noble will combine their research and development efforts.
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