Microsoft and Barnes & Noble are joining hands to form a new Barnes & Noble subsidiary that’ll be dubbed “Newco” (get it?) until someone comes up with a better name. The “strategic” venture, into which Microsoft says it will pour $300 million, is designed to “accelerate the transition to e-reading,” as well as symbolically lay to rest a patent dispute that’s been ongoing since March 2011. Microsoft’s investment will give it a minority stake of 17.6% in the new subsidiary, while Barnes & Noble will command 82.4%.
At first blush, it’s as if Microsoft were paying Barnes & Noble a ridiculous amount of money to develop a Windows 8 version of Nook. In fact that’s just what the relationship will yield up front: a Nook app for Windows 8, which Microsoft says will bring Barnes & Noble’s digital catalogue to Windows customers around the world. There’s nothing about device specifics in the press announcement, but you can bet both companies are thinking about the upcoming wave of Windows 8-based tablets wielding Microsoft’s tile-style “Metro” interface. Windows 8 still has no official release date, but word is we’ll see it by October.
The deal will also tap Barnes & Noble’s college business, where students and educators can, today, rent or purchase digital e-books via Barnes & Noble’s “Nook Study” software. Call that a partial reaction to Apple’s much hyped announcement back in January that it was partnering with major book publishers to roll out textbooks via iBooks 2, its free e-reader for iPads and iPhones. The new subsidiary will also have a relationship with Barnes & Noble’s retail stores (probably referring to retail-sold Nooks).
You wouldn’t have seen this deal a year ago, after Microsoft took legal action against Barnes & Noble (and others) for alleged Android-related patent violations. At the time, Microsoft wrote it had “no choice but to bring legal action to defend our innovations and fulfill our responsibility to our customers, partners, and shareholders to safeguard the billions of dollars we invest each year to bring great software products and services to market.”
Call that water under the bridge: The companies say they’ve settled the patent dispute, and that the subsidiary “will have a royalty-bearing license under Microsoft’s patents for its NOOK eReader and Tablet products.”