In effort to gain a foothold in the hot ebook sector, Microsoft is investing $300m in US bookseller Barnes & Noble’s Nook ebook business. Microsoft is coming from behind in this space and will be hoping that Nook will enable it to stand up against Apple and Amazon but that’s a big ask given the runaway success of the iPad and the ‘fiery’ success of the Kindle.
Microsoft will be looking to benefit in several ways. The investment should enable it to further diversify and reduce its heavy reliance on Windows revenue. The business will run as a subsidiary, in which Microsoft will have a 17.6% stake. However, other recent diversifications have not paid off - Nokia for instance – and Microsoft/Barnes & Noble will be up against two fierce competitors who are experiencing major momentum (see ereaders and tablets rule this Christmas). But Microsoft is putting the investment in. In addition to the initial commitment, Microsoft has committed $180m over three years in guaranteed revenue-sharing payments for ...