Barnes & Nobleís announcement today of a $300M partnership with Microsoft is good news for lovers of books in both print and digital form. The deal establishes a new company comprised of the Nook e-reader and its college book division. B&N will own 82 percent of the entity that initially is valued at $1.7B. That yet unnamed outfit holds a greater valuation than the rest of B&N
Nook is a worthy competitor to Amazonís Kindle in the fast-growing e-book market. It has about a 30 percent share compared to Amazonís 65 percent.
Prior to the deal, there was widespread worry that financially weak and acquisition-target B-N would be unable to bankroll further growth for Nook. That perception goes away due to Nookís potential access to Microsoftís deep pockets. Nook is here to say. [Full-disclosure: I own a Kindle, not a Nook.]
The new company retains ties to B&Nís nearly 700-member store chain. The introduction of Nook enlivened its outlook. The stores are important marketing tools for Nook. For instance, B&Nís Fifth Avenue flagship store in Manhattan has devoted more and more vital main floor selling space to Nook and its expanding line of accessories. Thatís created more buzz.
B&Nís stores may not have the design sizzle of Appleís stores, but they serve the same purpose. Customers get a hand-held introduction to Nook by a highly trained sales force. Itís a vital marketing advantage that B&N has over Amazon.
For Microsoft, a non-player in the e-reader market, the B&N outlay is chump change in its battle with Amazon. The initial benefit is a Nook app for Windows 8 and access to college students.
The deal is a PR win for both B&N and Microsoft.