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B&N gears up to launch a new Microsoft-backed college content, digital goods venture
Microsoft is partnering up with Barnes & Noble to fight Amazon and Apple in the ebook wars. Microsoft confirmed the rumors that Barnes & Noble was interested in creating an entire business based on the Nook, by stating that it will invest $300 million, at a $1.7 billion valuation, into a new B&N digital and college business that has yet to be named.
Barnes & Nobles' stock price (NYSE:BKS) soared nearly 67% on the news of this investment, in early morning trading, to $22.72.
B&N will own approximately 82.4% of this new subsidiary and the company will use the new Windows 8 platform.
“The shift to digital is putting the world’s libraries and newsstands in the palm of every person’s hand, and is the beginning of a journey that will impact how people read, interact with, and enjoy new forms of content,” said Andy Lees, president at Microsoft, in a statement. “Our complementary assets will accelerate e-reading innovation across a broad range of Windows devices, enabling people to not just read stories, but to be part of them. We’re at the cusp of a revolution in reading.”
The Nook, as it functions currently, is built on a forked version of Google’s Android platform.
Microsoft has been working hard to promote its platform (especially since the launch of the Windows phone earlier this year) but there has yet to be a wave of great digital content for it — specifically e-books. The Nook has trailed behind the Kindle Fire in the Android market, but does have the potential to be the name in tablets on the Windows platform -- especially if it can meet or beat the Fire's price tags of $199.
Every digital goods and tablet company has been eyeing the education sector as well -- since that is one area in this industry that is poised to soar in the coming few years -- and with B&N combining its college content with the digital goods, it is clearly building a strategy to get this sector right out of the gate.
Microsoft just recently closed its biggest cloud service deal in the education sector and is looking to create more student and teacher friendly services to flush out the market.
Microsoft's deal, closed earlier this month was with the All India Council for Technical Education to deploy Microsoft’s Live@edu service to 10,000 technical colleges in the country, spanning 7.5 million users.
This makes the agreement a monumental moment, not just for Microsoft's cloud services usership base, but also marks a big shift in the education sector.
The technical colleges will now use Live@edu, Microsoft’s hosting communication and collaboration service specially built for the education sector, to provide collaboration services, email, web apps, IM services and storage to 7 million students and half a million staff and faculty members. The deployment will roll out over the next three moths, Microsoft said in a statement.
Microsoft didn't disclosed the price tag on the deal, but it was competing against Google and IBM for this contract.
For this deal, Barnes & Noble and Microsoft have settled their patent litigation, and moving forward, Barnes & Noble and its new subsidiary will have a royalty-bearing license under Microsoft’s patents for its NOOK eReader and tablet products.
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