Microsoft Buys B&N’s Nook Business

Microsoft is making a $300 million investment in a new subsidiary of Barnes & Noble that will include all of its Nook business as well as its educational College business, valuing the company at $1.7 billion in exchange for around 17.6 percent equity in the subsidiary, reports Tech Crunch.

Barnes & Noble will own approximately 82.4% of the new subsidiary, which will have an ongoing relationship with the company’s retail stores. Barnes & Noble has not yet decided on the name of Newco.

According to the Microsoft press release:


One of the first benefits for customers will be a NOOK application for Windows 8, which will extend the reach of Barnes & Noble’s digital bookstore by providing one of the world’s largest digital catalogues of e-Books, magazines and newspapers to hundreds of millions of Windows customers in the U.S. and internationally.

The inclusion of Barnes & Noble’s College business is an important component of Newco’s strategic vision. Through the newly formed Newco, Barnes & Noble’s industry leading NOOK Study software will provide students and educators the preeminent technology platform for the distribution and management of digital education materials in the market.

Barnes & Noble and Newco will have a royalty-bearing license under Microsoft’s patents for its NOOK eReader and Tablet products. This paves the way for both companies to collaborate and reach a broader set of customers.

Amazon already offers a version of its Kindle reader app for Windows 8. Currently, Barnes & Noble relies on a customized version of Google’s Android operating system for products such as the Nook Color. It’s not clear if the new B&N company might opt to use Microsoft software going forward given the new partnership.

What Apple is attempting to do with free software and limited distribution is bound to fail, said Bill McCoy, executive director of the International Digital Publishing Forum (IDPF), a global trade and standards organization for the promotion of electronic publishing.

The IDPF developed the EPUB 3 e-book file format that Apple’s free iBooks Author seems to adhere to when it creates an e-book file.

“To limit the distribution of an EPUB file to only Apple’s channel would be the equivalent of Google saying that you can only use the HTML created with Google Docs on the Google Chrome browser,” said McCoy.

EPUB 3 is built on HTML 5, which means that publishers can build JavaScript into their books. If allowed, remote data calls through JavaScript embedded in an EPUB 3 e-book will open up a whole new world of customer information and customer interaction for book publishers. The Nook platform supports E-Pub-2 and may eventually support the full EPUB 3 spec as well. Amazon’s Kindle, in contrast, does not currently support Epub-2.

Asus and Nvidia described a $250 tablet with Android 4.0, a 1280-x-800-resolution IPS display; 1GB of RAM; micro-USB, micro-HDMI and microSD ports; and two cameras, including an 8-megapixel rear-facing lens. Google is rumored to be working with Asus on a 7-in. tablet priced around the $150 to $200 range. The Google I/O conference this June might be a good time to announce such a product.

Amazon’s $200 Kindle Fire tablet has sold exceedingly well. Amazon sold 6 million of the $199 Kindle Fire in the fourth quarter, a Stifel Nicolaus analyst said. comScore says the Amazon Kindle Fire is 54.4% of US Android tablets.

Meanwhile, Apple sold 15.4 million iPad tablets in the last quarter of 2011, more than double the number it sold for the same period in 2010.

Gartner forecasts Android tablet sales increasing eight-fold over the next five years, but iSuppli says Apple will maintain a dominant market share. They predict total global media tablet shipments will reach 124 million units in 2012, up 90 percent from 65 million in 2011, with shipments projected to increase to 197 million in 2013, to 250 million in 2014, to 285 million in 2015 and to 311 million in 2016.

Forrester Research estimates e-books will generate $2.8 billion dollars in sales in the United States by 2015. That’s well up from 2009’s $301 million. And as of February, about 21 percent of American adults reported reading an e-book during the previous 12 months, a four-percentage-point increase from December, according to a study by the Pew Research Center’s Internet and American Life project.

iPad and Android media tablet users have become and will remain avid app users over the next five years, says ABI Research, averaging more than 31 downloads per year per media tablet.

Posted by Sam Churchill on .

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