Now that Windows 8 is nearly upon us and the ereader world has not faded away as it so many times was said to be doing, Microsoft is investing in the ebook industry. You’ve seen the news this morning that Microsoft is investing in Barnes & Noble for $300 million USD, then there’s slightly newer news that they’re also dropping $180 million for revenue sharing on an upcoming Nook app for Windows 8 and an additional $125 on Barnes & Noble’s new subsidiary “NewCo” which will house Nook. Microsoft is buying its future in the easy-to-use electronic books business.
As it’s been proven again and again by the likes of Apple and Google over the past few years, vertical integration of products and services is essential to compete in our modern mobile industry. Apple has a tablet and a book store – when people buy one, they’ll tend to use the other. The same will be true when Windows 8 tablets hit the market and the Microsoft-owned Nook app sits on the home screen.
The $125 payed to NewCo is listed in Microsoft and Barnes & Noble’s 8-K form registered today under “Commercial Agreement.” This section contains the following note on where that cash is going to go: “for purposes of assisting NewCo in acquiring local digital reading content and technology development.”
Barnes & Noble will work with Microsoft as their trusted ebook source while Microsoft provides them the leverage they need in the advertising world to remain a force to be reckoned with against Amazon. Plain and simple.