Microsoft Buys Into Barnes & Noble And Its Nook eBook Reader Biz

Microsoft Windows 8 Nook Tablet

Microsoft invests money into Barnes & Noble to raise the value of the company and participate in the booming ebook and ebook reader market.

Microsoft invests $300 million and almost a 20 percent stake to raise the value of the e-reader manufacturer

Barnes & Noble who, up until this point, has remained independent and a competitor to Microsoft through its e-readers (especially as Microsoft will be pushing tablets later this year), has now received an investment from the software giant: $300 million. Microsoft didn’t reveal for what purpose the investment is specifically, simply saying that it’s to raise the value of the company.

The investment values Barnes & Noble at $1.7 billion, which is a respectable amount by anyone’s standards. Barnes & Noble has a current market capitalization of about $791 million, and some analysts have begun to argue that the retail and digital divisions could be separated as a result. I’m surprised analysts aren’t took about a buyout, giving the size of the investment.

Though while that doesn’t seem to be happening (for now), there is going to be integration into Microsoft’s services. There will be an app on Windows Phone 8 – not Windows Phone 7, interestingly -, and Apollo – as it’s known – is set for a preview release in June this year. Whether the app comes over to Windows Phone is unknown, but I’m going to say it will because Microsoft will want to integrate its two operating systems as much as possible.

Previous history

The investment doesn’t represent previous run-ins between the companies, though. The companies previously had a dispute over the Nook, as Microsoft infringed Barnes & Noble as it claimed copyright infringement. The Nook uses the Android operating system, and Barnes & Noble said Microsoft was trying to bully companies using the OS. Considering Android is open source, there’s nothing Microsoft can do.

As a result of the investment the patent dispute has ended. Going forward, Barnes & Noble will have a royalty-bearing license under Microsoft’s patents for the Nook.

It also looks like Barnes & Noble is looking to go beyond tablets, as the company has filed patents that cover the company’s potential products (including a kitchen sink). A listing also appeared online for a headset, not the headphones the company currently sells.

Barnes & Noble have said they’re looking at a spinoff of the Nook business.

Published: Monday, April 30th, 2012 Last Modified: April 30, 2012

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