Barnes & Noble has announced it’s creating a new subsidiary which will house the company’s digital and college businesses. That means that the NOOK eReaders and tablets and digital book divisions won’t be under the same roof as B&N’s nearly 700 book stores in the US — but NOOK eReaders will still be tied to the company’s retail stores.

In other words, you’ll probably be able to pick up a NOOK device at a Barnes & Noble store, and when you go to to shop for eBooks, purchases will still be delivered to your NOOK.

So what exactly is new?

NOOK Tablet

For consumers, not much — except that Microsoft has agreed to invest $300 million in the new company, giving Microsoft a 17.6 percent equity in the company. As part of that arrangement, one of the first things we’ll see from the unnamed new subsidiary company is a NOOK app for Windows 8.

Although to be fair, I would have expected a NOOK app for Windows 8 whether or not Microsoft threw money at B&N. Competitors Amazon and Kobo are already two of the first companies to release apps for the new Windows 8 Metro user interface.

But the big picture here is that Microsoft is getting more involved in the eBook business — and Barnes & Noble is strengthening its position by further separating its digital book business from its bricks and mortar retail stores. As eBook consumption rises and paper book sales fall, that could be a smart move to ensure B&N has a future.

via AP

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9 replies on “B&N to spin off NOOK business, Microsoft to invest $300 million”

  1. ZDnet has an interesting article on what Microsoft’s game plan.  Basically, MS might be looking to claw its way back into the ebook business by quickly putting together an ecosystem around either
    Windows 8 RT or Windows 8 Phone, supporting a $199 Barnes and Noble
    tablet/ereader.  B&N could operate the app/bookstore, an extension of its existing Nook online store.  MS could contribute its Zune music infrastructure. 

    The article doesn’t mention it, but Nokia could certainly get involved making the hardware. 

    Since MS owns a stake here, it could license the software for virtually nothing, and even come up with a non certified version of the OS to run on the tablet if the tablet’s screen isn’t 1366 x 768 (so that snap would not be implemented).  Alternatively, NewCo could come up with a 10″ tablet/ereader with higher resolution, combating Apple’s efforts to leverage its retina display to encompass textbooks, coffee table picture books, and interactive media content.;feature-roto

    There are tremendous tech hurdles, such as fitting a 1366 x 768 screen
    onto a 7″ screen,  porting RT or Phone to the tablet (which could take several months, making the product a 2013 release), B&N’s financial weakness (to the point where B&N won’t be able to contribute anything meaningful to the venture), Windows 8 RT’s bloat.

    The article suggests MS could pick up a bankrupt NewCo (the tentative name of the MS-B&N joint venture) for a pittance ($300 million is loose change to Redmond). 

    If MS can pull all this off and come up with a Win 8 RT tablet at the 8 GB Nook Tablet price of $199 (the magic number for consumers), Ballmer could conceivably say, Terminator style, “I’m back.”

  2. I may consider the next generation of the Nook tablet, although I wonder how to use it to justify the price. Email and light web searching?  Learning how to read books on a machine?  My wife and daughter have iPads, play scrabble together, etc.  My wife says it is does email very fast.  My daughter likes it enough practically to discard her laptop and Kindle.  Since I use computers mostly to write long footnoted articles and books, I regard tablets as a luxury, a device in search of a purpose.  How often do I use my netbook?  It is the old problem: different people use computers differently, so there is no ideal computer.  By the way, between us my wife and I have seven computers and a Kindle e-reader at home, and she has another computer at her office.  Is there something wrong with this picture?  Is it all too common?  I do not even mention fancy phones.

    1. I should add that games bore me, I don’t watch films alone, and rarely travel overnight.  These facts reduce the value of a tablet for me.  Please instruct me how a tablet will contribute to my productivity and general happiness.  Am I missing something?

  3. Wow — I’m a bit surprised, especially since B&N was refusing to pay Microsoft’s patents for the nook (the really BS ones it asserts against all Linux-based devices) and was winning in court.

  4. This is a solution to B&N’s dilemma so far.  Its brick-and-mortar stores are going the way of Blockbuster’s.  While there will likely always be a place for paper books (after all, they’ve survived up to this point), the future of books is clearly digital.  Spinning the digital business was a way to unlock the business’ value, and avoid shareholder lawsuits. 

    Microsoft has been an also-ran in the ebook business.  While it did pioneer early efforts in ebooks, with its Reader software and improved fonts, it failed to support a format (such as ePub, perhaps sticking too long with its Word DOC format) and a distributor (acquiring a stake in Amazon or Adobe would likely raise antitrust objections, Apple and Google are its arch-enemies).  

    MS has also lately been allying itself with weak competitors (such as Nokia), and B&N is yet another example.  Fortunately, MS has the wherewithal to withstand a bunch of fails.

    But while MS will still be around, the same can’t be said for B&N, digital or otherwise.  I only hope that if the end comes, that B&N does not leave its customers high and dry, and unlocks the copy-protected Nook ebook format.

    1. Well, the good news is that it’s pretty easy to strip the DRM from NOOK eBooks that use Adobe DRM.

      It’s also possible to root the NOOK, NOOK Color, or NOOK Touch which are all based on Android so you can use NOOK hardware to read eBooks that aren’t purchased from B&N, including Kindle books. 

      Unfortunately these aren’t things that most existing NOOK customers are likely to know or find out about… so while the hardware and the digital content for sale today could be useful even if B&N goes under, I’m guessing most people would just cut their losses and switch to another system… which is a disturbing trend in the switch from physical media to digital, thanks to DRM. 

      1.  there are still a lot of converters around and with this MS deal one might find nook reader functionality built into win 8 later on …

      1. Yep, some of my first eBooks were in the .LIT format… and I read them on my grayscale Philips Nino PDA. Those were the days… 🙂

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