With Barnes & Noble competitor Amazon taking off in the tablet market, it’s clear that Barnes & Noble needs to try something new, and that is exactly what it’s doing. Today Microsoft and Barnes & Noble announced the formation of a strategic partnership. The companies will form a new Barnes & Noble subsidiary which the companies claim will accelerate the transition to e-reading.
The subsidiary will be formed with the help of a $300 million investment from Microsoft, which will give it a 17.6% equity stake in the new company. The subsidiary is currently being called Newco, though Barnes & Noble hasn’t yet decided on that name. Newco will have an ongoing relationship with Barnes & Noble brick-and-mortar retail stores.
“The formation of Newco 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. “Microsoft’s investment in Newco, and our exciting collaboration to bring world-class digital reading technologies and content to the Windows platform and its hundreds of millions of users, will allow us to significantly expand the business.”
The companies announced that a NOOK application would be created for Windows 8, meaning Barnes & Noble’s digital bookstore will be featured on Microsoft’s new operating system. Also, Barnes & Noble and Newco will have a royalty-bearing liscense for Microsoft patents that those companies’ tablets, including the NOOK eReader, use.
“The shift to digital is putting the world’s libraries and newsstands in the palm of every person’s hand, and is the beginning of a journey that will impact how people read, interact with, and enjoy new forms of content,” said Andy Lees, President at Microsoft. “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 on the cusp of a revolution in reading.”
The things Lees said about e-reading and digital content are undoubtedly true, and I admire his confident assertions. However, both Microsoft and Barnes & Noble seem to be a step behind in their respective markets. This partnership might help both companies, but there is still a lot of ground to make up against the likes of Apple and Amazon. What do you think? Will we be seeing Windows 8 NOOKs in the near future? Will this partnership provide anything meaningful for consumers? Leave a comment below and let me know.