Microsoft-Barnes deal adds fury in battle over e-books - Hindustan Times
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Microsoft-Barnes deal adds fury in battle over e-books

None | ByMichael J De La Merced and Julie Bosman, NYT, New York
May 02, 2012 01:20 AM IST

Microsoft agreed to invest hundreds of millions of dollars in Barnes & Noble’s Nook division on Monday, giving the bookstore chain stronger footing in the hotly contested electronic book market and creating an alliance that could intensify the fight over the future of digital reading.

Microsoft agreed to invest hundreds of millions of dollars in Barnes & Noble’s Nook division on Monday, giving the bookstore chain stronger footing in the hotly contested electronic book market and creating an alliance that could intensify the fight over the future of digital reading.

The deal, which gives Microsoft a 17.6% stake, values the Nook unit at $1.7 billion — roughly double Barnes & Noble’s entire market value as of last Friday — and bolsters the bookseller’s efforts to make its digital business the linchpin of its future growth.

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The announcement was the latest surprise in an unpredictable and rapidly shifting e-book market, which is crowded with technology giants trying to chip away at Amazon.com’s dominance. Amazon once had close to 90% of the e-book market, but since then, a handful of players, including Apple, Google and now Microsoft, have edged in.

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The deal binds together two onetime market leaders that have lost ground. Barnes & Noble, which is the US’s largest bookstore chain and has more than 25% of the e-book market but still lags well behind Amazon, has a rich and powerful partner with global reach.

The alliance will give Microsoft a close ally in one of the most important battles reshaping the landscape in technology, retailing and media.

Microsoft has been forced to radically reimagine Windows, its flagship software franchise, for a future in which much Web browsing, movie watching, book reading and other activities occur on tablets.

This puts it squarely up against Amazon, with its popular Kindle devices, and Apple, which has had runaway success with its iPad. Google, too, has been scrambling to build up its own service with an expansion of its Google Play store.

The deal is “clearly motivated by Apple and Amazon as relatively unstoppable forces, each in their own domain,” said James McQuivey, an analyst, Forrester Research.

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