The move is also a sign that Microsoft is gearing up for its launch of Windows 8, a critical upgrade to its signature operating system, which will run not just on traditional computers but also on tablets and mobile devices. Many analysts say that Microsoft doesn’t need to be the first or most glamorous among mobile players as long as it wins the masses by offering a wide array of less-expensive options.
A $100 or $200 Nook tablet with the latest version of Windows, and perhaps even Microsoft Office, could eventually siphon off a lot of consumers from the more expensive iPad, these analysts say.
“Our complementary assets will accelerate e-reading innovation across a broad range of Windows devices, enabling people to not just read stories but to be part of them. We’re at the cusp of a revolution in reading,” said Andy Lees, a president at Microsoft.
The companies will combine research and development, which has analysts speculating about a more ambitious tablet. Such a device could feature Xbox games and Office software, the preferred professional software of businesses, schools and government agencies.
“This could be an area where things coalesce for Microsoft,” said Allen Weiner, vice president of research for Gartner. “You look for beachheads that will get you into people’s lives — education is one of them. Microsoft has not been great in other areas, but things may be coming together now.”
To that end, a Nook app will be featured on any smartphone or tablet that runs Windows 8 after the new software is released this fall. And Microsoft’s global sales team will start promoting the Nook overseas — giving the struggling bookseller a global reach enjoyed by rivals Amazon and Apple.
For now, the Nook remains an underdog. It is ranked fourth in sales with 3.5 percent of the market, according to International Data Corp. research. Yet the market for tablets is expected to explode as schools turn to the devices for teaching and more businesses use them instead of laptop computers, analysts say.
Microsoft has been on a buying binge in recent years as it tries to create a broad ecosystem of products and services for the Internet. Those purchases and partnerships have had varying success.
Last year, it bought Skype for $8 billion to integrate video conferencing into its professional software. Its purchase of gaming companies Rare and Bungie Software in the past decade reaped successful games such as Halo for its Xbox gaming console.
Other bets have turned sour, such as its $400 million acquisition of Hotmail and the now-defunct WebTV.
While Microsoft has been late to the mobile wars, some analysts say not to count it out. It has $60 billion in cash. Its enterprise software businesses make it one of the most profitable companies in the world. With a nearly $270 billion market value, the Richmond, Wash., company is one of the most valuable in the world.
And, some analysts say, Microsoft can adopt the same tactics it used during the PC wars against Apple. Back then, Microsoft endured Apple’s early dominance and eventually surpassed its rival by offering more varied and cheaper alternatives.
Today, Microsoft is “playing catch-up, but they are okay being the second or third ecosystem out there for now,” said Al Hilwa, an analyst at IDC.
That’s not to say that Microsoft isn’t trying out new ideas. In a recent congressional hearing on the future of online video, a Microsoft executive touted a vision of a consumer using Microsoft voice recognition software to tell his or her Xbox to search on Bing for a specific episode of the television show “Mad Men.”
Analysts are warming to such notions, adding that the trick for Microsoft is to integrate its various business lines.
“The Xbox is the best TV experience out there, and Microsoft is finally realizing that if they tie the Xbox to the tablet and the PC then they would beat Apple with an integrated experience,” said James McQuivey, an analyst at Forrester research.