Bookseller Barnes & Nobles Nook e-reader and tablet continue to find footing in the increasingly crowded market and the company announced a major deal with Microsoft. Yet comments from B&N CEO William Lynch suggest the company will be sticking with the open-source technology powered by Google Android that is used on the Nook, rather than running a version of Microsoft Windows.
In an interview with Fortune magazine, Lynch said that the Nook would remain an open-source device, despite Microsoft bringing B&N on board as an application for Windows 8 smartphones and computers. Currently, weve not communicated anything related to the road map about any hardware collaboration on Nook. Nook, as you know, uses open sourcing. Microsoft is obviously very entrenched in Windows, he said. On the reading software side, in reading technologies, theyre making interesting integrations into Windows, potentially Office. That kind of work has already started. Definitively yes.
Microsoft and Barnes & Noble are partners in a new subsidiary, referred to only as Newco, which will bring together B&N's digital and college businesses. 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 percent equity stake. Barnes &Noble will own approximately 82.4 percent of the new subsidiary, which will have an ongoing relationship with the companys retail stores.
One of the first offerings will be a Nook application for Windows 8, which will extend the reach of Barnes & Nobles digital bookstore by providing their digital catalog of ebooks, magazines and newspapers to Windows customers in the U.S. and internationally. Lynch told Fortune that the application and technology behind the Nook Study software will provide students and educators with a technology platform for the distribution and management of digital education materials.
"If you look at the content sort of flow from authoring tools, obviously, Microsoft is one of the leaders, if not the leader in authoring tools with Word, PowerPoint, Excel, their Office franchise, all the way through the transaction buying merchandising, sale or cloud management of the content. You can see us working across that," he said. So again, we havent announced anything specifically, but imagine an integration where an information worker, student, author, consumer, creates something in Office and has it immediately published for sale through the Nook bookstore. It starts to open a lot of exciting possibilities.
B&N sold more than 800,000 Nook Color devices in the fourth quarter of 2011, according to a report from research firm IDC. Along with sales of Amazons Kindle Fire, another Android-powered device, those two tablets powered the Android platform to 40.3 percent media-tablet market share in the fourth quarter of 2011, up from up from 32.4 percent in the third quarter. The Kindle Fire costs $199 and the Nook Tablet sells for $249, making both devices friendly to price-conscious consumers seeking a tablet at a time when the iPad starts at $499.