From the press release:
Barnes & Noble Inc. (NYSE: BKS) and Microsoft (NASDAQ: MSFT) today announced the formation of a strategic partnership in a new Barnes & Noble subsidiary, which will build upon the history of strong innovation in digital reading technologies from both companies. The partnership will accelerate the transition to e-reading, which is revolutionizing the way people consume, create, share and enjoy digital content.
The new subsidiary, referred to in this release as Newco, will bring together the digital and College businesses of Barnes & Noble. Microsoft will make a $300 million investment in Newco at a post-money valuation of $1.7 billion in exchange for an approximately 17.6% equity stake. 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.
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.
If you can’t beat ’em in patent court- buy ’em out.
Or, if you’re going to get steamrolled and bankrupted, take the lifeline.
Hysterics don’t get you very far in the tech world.
IP and partnerships do.
It’ll be interesting to see if there is any reality to the rumors of a MetroNook.
Considering how little traction the Nook app store has gotten, switching to Win8 with its access to Zune audio and video and the XNA game platform will get B&N closer to FIRE parity a lot cheaper than trying to build it all up themselves.
Felix-
You’re entitled to your opinion.
But, hysterics FTW!
One of the pivotal influences occurred at the RIT Future of Reading conference in June 2010. Richard Lanham, UCLA presented his karaoke tutorial in prose revision, an animated video now more than 30 years old. The bouncing ball of rhetorical revision demonstrated how running text can have words reduced by 40% without any loss of meaning. It struck the audience as revolutionary in the current context of electronic textbooks. “Words actually dance around” and alphabetic information can be dimensionally displayed. It took the educational engineer from Microsoft three days to get over the Lanham video.
Richard Lanham is one of the legendary classical practitioners of rhetoric along with Walter Ong and Marshall McLuhan. These scholars have long ago understood the assimilation of screen display into text literacy. See Lanham “The Electronic Word”, 1993.
Barnes and Noble is toast as an independent company. A partnership with Microsoft (ultimately leading to a buyout) would keep them in the game.
Microsoft, no longer hip and nimble, still generates boatloads of cash from it’s Windows, Office and XBox franchises. Snapping up a wounded B&N would vault them into the ebook game.
I see this as a smart play for both parties.
@Binko Barnes: The deal going on is just the first step in what looks to be a total restructuring of B&N. They have in effect moved all the growth parts of the company–ebooks, software development, the college bookstores, the international expansion team–into “Newco”. They still need to say what they intend to do with Sterling, the online retail, and the storefronts. A safe move would be to spin-off the legacy p-book operation into another wholly-owned corporation and setup a holding company to control the stock in the two (or more) subsidiaries. That would allow the storefronts to grow or shrink on their own (possibly even go into bankruptcy) wiithout dragging the whole company with it.
So the odds of *something* named B&N surviving long-term just went way up. Remember, they still have 35% of “Newco” stock they can sell or hock to raise cash (without giving up control) to keep “Newco” running. (About $600 million worth of equity at today’s prices.) No much chance of (or need for) MS buying them out now.
More-so that desktop Windows 8, I see this as a piece of Microsoft’s mobile strategy. Win8 mobile is supposed to be based on much of the same building blocks as Win8 desktop. That instantly opens the B&N catalog to all Win8 mobile users, which is beneficial to both sides.