Microsoft bets big on ebooks - invests $300 million into Nook subsidiary

Signs deal with Barnes & Noble

Microsoft bets big on ebooks   invests   185 million into Nook subsidiary

Microsoft bolstered its ebook plans this week, announcing a digital link-up with US book firm Barnes & Noble.

The deal is worth a massive $300 million (£185 million) and will mean that the computing giant will have 17.5 per cent stake in a new subsidiary called Newco (this is a temporary name) which will look after Barnes & Noble's digital and college businesses.

Nuking the Nook?

The big news coming from this is that the Nook digital bookstore will be bundled with Windows 8 – which could well spell the end of the Nook tablet, given that this app will work on every upcoming Windows 8 tablet and computer.

Barnes & Noble will be hoping that all it does is extended its reach further, however, given that Amazon offers a similar thing and the Kindle shows no sign of waning in the market.

"The formation of Newco and our relationship with Microsoft are important parts of our strategy to capitalise on the rapid growth of the Nook business, and to solidify our position as a leader in the exploding market for digital content in the consumer and education segments," said William Lynch, CEO of Barnes & Noble.

"Microsoft's investment in Newco, and our exciting collaboration to bring world-class digital reading technologies and content to the Windows platform and its hundreds of millions of users, will allow us to significantly expand the business."

The new agreement also means that Micosoft and Barnes & Noble are friends again, as it marks the end of the pair's court battle over patent litigation.