Ebook Wars: Microsoft and Barnes & Noble Team Up to Take On Amazon

Posted on April 30, 2012

"The enemy of my enemy is my friend." Microsoft and Barnes and Noble execs must have been reading The Art of War lately, because the two companies have decided to stop suing each other over patents and join forces to topple ebook behemoth Amazon.com. Who ever imagined that ebooks would generate so much excitement and drama over the years? First it was Steve Jobs convincing book publishers to go with the agency pricing model in a bid to bring Amazon.com to its knees. Jeff Bezos threatened to drop the publishers' books from Amazon.com if they wouldn't allow him to set the price for ebooks he paid the wholesale price for. Bezos lost that round, but is now winning the war because the Justice Department slapped down Apple and the book publishers for price fixing. Now two warring companies are settling their differences in a bid to take out Amazon.com on another front. No doubt Jeff Bezos is already preparing his tech armies to meet this latest assault in the ebook wars.

According to the release, the two companies will create a new (as yet unnamed) Barnes & Noble subsidiary which will "build upon the history of strong innovation in digital reading technologies from both companies." The statement further explains that "the partnership will accelerate the transition to e-reading, which is revolutionizing the way people consume, create, share and enjoy digital content."

Microsoft will invest $300 million in the new company and will receive a 17.6% equity stake. Barnes & Noble will own the other 82.4%. The company will use Microsoft technology to boost performance and sales of the Nook. There will soon be a Nook application for Windows 8, which will allow easy access to Barnes & Noble's digital bookstore. Barnes & Noble's College business will also be part of the new company.

Andy Lees, President at Microsoft, had this to say about the deal: "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. 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."

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