Microsoft and US bookseller Barnes & Noble have announced plans for a joint digital venture, with the computer giant investing $300 million in the deal.
The announcement will see the two companies team up to launch a new venture, which will include Barnes & Noble’s existing digital and college businesses.
The new business that will be created by the two companies does not have a name yet, although has the working title of Newco.
Microsoft has invested $300 million, around £185 million, for a 17.5% stake in the new subsidiary – giving the unnamed business a value of $1.7 billion.
Good news for Barnes & Noble
While Microsoft will be expecting a return on its large investment, the deal is a massive boost to Barnes & Noble.
The retail giant has been hailed as the only real competitor to Amazon in the ereader stakes, but its Nook ereader has still struggled to match the success of the Kindle.
The deal could see the Nook digital store come to Windows 8 when it launches later this year, opening up Barnes & Noble’s eBook store to millions of new customers.
“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.
What does it mean for Nook ereader?
This is an exciting time for Barnes & Noble, but the integration with Windows 8 could spell the end of the Nook ereader.
But for now, Barnes & Noble will only be thinking about the millions of potential customers offered by the deal, so we doubt there’s much concern at the moment.
“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,” added Mr Lynch.