May 09, 2013 (11:05 AM EDT)
What Nook Could Buy Microsoft
Read the Original Article at InformationWeek
TechCrunch broke the news, claiming it had acquired internal documents that revealed not only Microsoft's offer, but also plans to phase out Nook's Android-based tablets by the end of 2014. An anonymous source told The New York Times that the documents are authentic and only a few weeks old. According to the Times, which noted that Nook was valued at $1.8 billion as recently as December, it is not yet clear if a deal will be closed. Microsoft has so far declined to comment, but the Times source claimed any announcements are at least weeks away.
To an extent, Microsoft's ostensible interest in e-books is a natural evolution. It invested $300 million in Nook Media in April 2012, and Microsoft VP Andy Lees asserted that his company saw great potential in the partnership.
"Our complementary assets will accelerate e-reading innovation across a broad range of Windows devices, enabling people to not just read stories, but to be part of them," he said at the time. "We're at the cusp of a revolution in reading."
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What the alleged revolution entails is still far from clear. To date, Microsoft's investment has produced only a Nook app for Windows 8, as well as occasional rumors that e-books could play a headline role in future Surface devices.
Nook took a beating during the holidays, slashing prices in the face of increased consumer preference for devices such as Apple's iPad and Amazon's Kindle Fire. Even so, the Barnes & Noble e-book ecosystem still boasts millions of users. Microsoft remains a dominant force in the enterprise but has struggled to find similar success among consumers, outside of its Xbox business. Redmond could perceive Nook as a useful asset as it attempts to rectify this imbalance.
TechCrunch reported that once Nook hardware is discontinued, the company will distribute e-books via third-party apps. Which platforms will be privy to these apps is not yet clear. But even if Microsoft opens Nook to iOS and Android -- and doing so could certainly be profitable -- the software giant could still tailor its acquisition to drive Windows sales.
The education market, for example, is shifting from physical books to tablets, and a Nook-optimized Windows 8 device could serve this market well. Even before the rumor broke, Microsoft's internal apps team was reportedly working closely with its Nook counterpart, suggesting that even if Barnes & Noble's e-books are available on all platforms, the Windows version might offer a differentiated, premium experience.
Windows 8 still trails iOS and Android in total mobile apps, and though Microsoft has made recent progress in this regard, it still lacks a killer title to differentiate it from the competition -- i.e., Windows 8's version of Halo. The fact that Microsoft will soon offer a complete OS at the iPad Mini's price point could persuade consumers to join the Win8 bandwagon, but a well-executed Nook tie-in has potential of its own.
There have also been indications that Nook might hook into Microsoft Office, perhaps allowing users, for example, to publish to an online bookstore directly from a Word document. This sort of synergy could benefit Redmond in multiple ways. Though some users view older versions of Office as adequate for their needs, Microsoft has added features -- ranging from Bing apps to its Office 365 subscription model -- to compel customers to upgrade. The strategy has already paid off, and if Nook is integrated into the mix, the product suite's appeal will only be enhanced.
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