Microsoft finds a nook of its own in Barnes & Noble

By Michelle Maltais

April 30, 2012 12 AM PT

Microsoft seems to have found an open window back into the e-book business, closing the door on an ongoing patent dispute with its new partner.

The company announced it’s making a $300-million investment into a strategic partnership with Barnes & Noble’s digital media businesses. This financial infusion will result in an as-yet-unnamed new subsidiary for B&N’s Nook device in which Microsoft will have a minority stake.

“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, Microsoft president, said in a statement.

Microsoft long has been interested in the e-book field but largely unable to get a foothold. Although it launched e-book software in 2000, it was never able to build a substantial library. This software will be discontinued on Aug. 30.

Microsoft has been revamping its approach to mobile as it has ceded much ground to Apple’s iOS and Google’s Android.

The deal with Barnes & Noble will result in bundling Windows 8 in the Nook digital bookstore when Microsoft’s new operating system launches later in the year.

“For Windows 8 (and Windows Phone) to succeed, it needs a broad cross-section of devices,” according to N. Venkat Venkatraman, a professor at Boston University’s School of Management. “Amazon’s Kindle Fire has over 50% of the Android OS Tablet market share win the USA, and B&N needs a credible road map for it to succeed.”

The new partnership marks the end of an ongoing patent battle between the two companies surrounding the use of Android, which Microsoft claims violates its patents, on the Nook tablet. As a result of the settlement, both B&N and the new company will have a royalty-bearing license under Microsoft’s patents for Nook e-readers and tablets.

One of the first developments of the deal will be a Nook app for Windows 8.

Venkatraman sees larger possibilities for the partnership.

“It could well be part of a strategic move to combine parts of Nokia and Nook to create a stand-alone entity that jump-starts Microsoft Windows Phone,” he wrote. “It’s an interesting strategic option play for Microsoft and B&N.”

The Associated Press contributed to this story.

Building an app universe comes at a cost for Microsoft

Follow Michelle Maltais on Google+, Facebook or Twitter