updated 07:50 am EDT, Mon April 30, 2012
Barnes and Noble gets investment, truce
Barnes & Noble and Microsoft on Monday settled an Android patent dispute through a union. An e-reading partnership, Newco, will see Microsoft take a $300 million, or 17.6 percent, stake in a project that should merge Barnes & Noble's Nook business and its college division. In return for the funding, Barnes & Noble will make a Nook app for Windows 8 to help foster textbooks on future Microsoft-powered tablets.
The same deal explicitly ends any legal action between the two sides. Barnes & Noble and the Newco partnership will still owe royalties for the Android-based Nook lineup. Terms for the royalties weren't given out, although Barnes & Noble will likely have been eager to stop some of the more stringent conditions Microsoft had originally wanted, such as blocking future Nook features and, allegedly, asking between $15 to $30 for every Nook sold.
The company added that its exploration of a possible split between digital and paper businesses was still in effect and that it might have to break Newco off as a separate project. No guarantees existed that such a move would even be necessary, Barnes & Noble said.
It's unclear what prompted the settlement. Barnes & Noble has regularly objected to the terms that Microsoft had originally demanded and which ultimately led to Microsoft suing Barnes & Noble. With no actual alternative to Android for an e-book reader from Microsoft, Barnes & Noble would have had to either pay the full royalty Microsoft levies against companies that don't use its software or else write its own, completely original software to avoid patent costs for either Android or its Linux foundations.
Microsoft, in turn, faces a climate where the iPad may dominate tablet textbooks, at least at the high end. The Redmond-based company is likely eager to get at least one major content partnership that would let companies offer Windows 8-based tablets to classrooms.