B&N, Microsoft Partner to Form Nook Media

The strategic partnership between Barnes & Noble and Microsoft is now complete and the new venture will be called Nook Media.

Nook Media will be a B&N subsidiary made up of its digital and college  businesses, backed by a $300 million investment from Microsoft. The partnership will help B&N continue its growth into digital content and allows the company to expand internationally, CEO William Lynch told The Wall Street Journal. Lynch added he expects Nook Media revenues to be $3 billion annually, but no decisions have been made for possible spinoffs.

“There can be no assurance that the review will result in a strategic separation or the creation of a stand-alone public company,” Lynch said. “Barnes & Noble does not intend to comment further regarding the review unless and until a decision is made.”

Nook Media does have one issue to address: The name is already owned by a Swedish developer of online gambling casinos, according to Digital Reader.

Breathing Room for B&N in Microsoft Deal

The partnership between Barnes & Noble and Microsoft is providing the bookseller with an infusion of capital it needs and the software giant with the foothold in the e-book and college textbook market it wants.

The deal calls for a new B&N subsidiary formed by spinning its digital and B&N College Booksellers divisions together into a new company, temporarily named Newco. Microsoft is investing $300 million into Newco for a 17.6% equity stake.

The infusion of money will allow B&N to grow its e-book business, while at the same time fending off shareholder calls for it to sell the Nook business or the whole company. In addition, it ends speculation that B&N doesn’t have the funds to go head to head with Amazon.com in the e-book business.

“Our biggest concern for Barnes & Noble has been its ability to compete against Apple and Amazon, two of the deepest-pocketed players in the technology and media world,” said Matthew Fassler, a Goldman Sachs analyst. “Newco now has an equally deep-pocketed partner.”

The investment also gives Microsoft a path into the e-book business and a presence on college campuses to compete with Apple. It was reported that a Nook app for the Windows 8 operating system would be developed, but B&N CEO William Lynch told Forbes that the only plan at this moment is to embed NFC chips into the device.

The deal should also give consumers greater confidence in the Nook, according to David Carnoy, executive editor at CNET News. Speculation about the future of B&N had Nook readers wondering about the titles they’ve purchased and if those would vanish if the company were to fail. But Microsoft’s willingness to invest millions means the Nook will remain.

Google eBooks launches

Today Google launched its online bookstore called Google eBooks. Up until this point, the program has been referred to as Google Editions. According to an article from Wired, the e-book store will have about 2.8 million books that are no longer under copyright and were scanned through the Google Books project. The store will have another 200,000 books that have been licensed from publishers. Users will be able to read the books on Apple devices, Barnes & Noble Nooks, Sony E-readers, and computers. The books will not be accessible on the Amazon Kindle because of compatibility issues.

In addition, Google has partnered with some independent bookstores to allow them to sell e-books on their websites and share the revenue. Google also plans to add social networking features and says it has the infrastructure in place to let consumers purchase digital and paper copies in a bundle.

James Crawford, an engineer for Google eBooks, noted, “The idea is that you buy where you are and read on devices you already own. We are committed to open structure, and building up a wider and wider retailer network.”

The Google ebookstore can be found here.

e-readers expected to be a top seller this holiday season

E-readers are expected to be a popular gift this holiday season and many e-reader companies have expanded the distribution of their devices to stores like Target, Best Buy, and Walmart. In addition, Amazon, Borders, and Barnes & Noble, have come up with new ways to promote their devices on the web or in the stores.

In an article from The New York Times, Peter Hildick-Smith, president of the Codex Group, says, “This is the tipping-point season for e-readers, there’s no question. A lot more books are going to be sold in e-book format. It also means that a lot fewer people are going to be shopping in bookstores.”

Forrester Research predicts that about nine million e-readers are currently in circulation in the United States and this could increase to 10.3 million after the holidays.

As mentioned previously, according to a survey by the Consumer Electronics Association, e-readers rank fifth on the holiday wish lists of adults.

B&N Nook Color

Earlier this week, Barnes & Noble unveiled a new color version of its Nook reader. The device features a 7–inch color LCD screen and Android operating system. This is an interesting device because it combines features of an e-reader and a tablet. It has a color screen and on screen keyboard like a tablet but does not include all of the capabilities or the larger device size. It is like other e-readers because it is designed primarily for the purpose of reading. However, this device will not be as easy on the eyes because it features a LCD screen with backlighting rather than a black and white E Ink screen. In terms of price, it also falls between cheaper e-readers and pricier tablets. Jamie Iannone, president of digital products at B&N, described the Nook Color by saying, “This device is the reader's tablet.”

According to an article from The Wall Street Journal, magazine and newspaper subscriptions with color photos will be available on the device. In addition, according to a posting on the Bits Blog, B&N has also introduced a new feature called Nook Friends that will allow readers to share content and notes with friends via social networks.

It will be interesting to see how this new type of device does this holiday season. B&N is expected to begin shipping the devices on November 19th.