Microsoft Makes $300M Investment In Barnes-Noble E-books Subsidiary | Hacker News Reader

Microsoft Makes $300M Investment In Barnes-Noble E-books Subsidiary

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36 pointsiProject22 comments

I realize there is more to the deal than just the Nook Color/tablets, but I think it is interesting to imagine that either the Nook will continue to run Android and Microsoft will now be involved with selling Android devices or existing apps already purchased will not work on future versions of a non-Android Nook device.

I'd imagine that Microsoft doesn't really care what the device runs. The money's in the content, not the hardware.

Microsoft has a lot at stake - WP7, as it is now, lacks credibility and that's absolutely critical in this "post-PC" world. Nooks running WP7 (and abandoning Android) could generate some.

They would run WindowsRT if anything, Microsoft is only using WP for phones.

IIRC, Microsoft has said WP8 will be based on the same core as Windows 8, so, whatever the tablet runs, will be a successor of WP7.

People have speculated that is what MS will do, but MS has never said that.

You are right. Microsoft has, so far, been ambiguous about the rumors about W8 and WP8 common infrastructure.

Unsurprisingly, thanks to this deal, the patent dispute has been settled. Here I was thinking that B&N would be the company which finally ended Microsoft's ludicrous patent claims over Android.

Now that you mentioned it, maybe Microsoft was afraid not only of losing a few hundred million dollars to B&N (which they ended up paying anyway in this investment, on top of what the digital division of B&N was worth), but that they will further invalidate more of what they thought were their "important" patents that they are using to get money from other companies.

Was it Motorola or B&N that invalidated 6 out of 7 of their patents? I think both managed to invalidate quite a few. If only the other companies would grow a pair, too. Who knows, maybe Microsoft will end up investing in them, too, just like with B&N.

This is the only explanation of this that makes sense to me.

I love how they slip the standard "royalty-bearing licence" text into an agreement when they're giving a company widely regarded as struggling nearly 0.3 bilion dollars. I assume the only reason the other firms aren't revolting over this is that they already secretly negotiated better deals which led to their agreements, again with the publicity highlighting the "royalty payments to Microsoft" and nothing else about the deals.

My first reaction: I feel pain for the old Microsoft Reader team, and Bill Hill, who pioneered a bunch of e-reading stuff and were shut down last year. Sucks being a victim of Microsoft's not trusting its visionaries.

My second reaction: Microsoft just paid B&N $300M to ensure that Android continues to fragment. B&N now has the resources to really take Android forward in whatever direction it wants.

Does B&N really have those resources though? At their current burn-rate, Microsoft gave B&N a few quarters of extra runway. It's not clear that the underlying fundamentals have changed all that much though.

So, B&N licensed Microsoft's patents for minus US$300M and a WP7 app... That's probably the correct valuation for them.

I don't understand the commentary about B&N possibly spinning off the subsidiary or selling it to Microsoft. Nook is B&N's only hope of survival.

BKS stock was up close to 90% at opening and is currently up 64.84%.

It's all a short-squeeze. Today's trading has little to do with actual valuation.

Here's hoping I can soon run Windows 8 on my rooted Nook 2. (not holding my breath though)

Can anyone think of any compelling reasons as to why this won't be another headstone in the graveyard of average acquisitions/investments made by Microsoft?

http://en.wikipedia.org/wiki/List_of_mergers_and_acquisition...

They have Azure to compete with AWS, and now they want to make a run at the Kindle. Investing in B&N right now actually seems pretty smart. B&N is in need of help, and for MSFT to start an eBook business from scratch would be very expensive. Microsoft offers more than just software. Just like Amazon sells the unused capacity of the servers running their own stores, Microsoft can do the reverse, using the unused capacity sold on Azure to host their own products. $300 million doesn't seem unreasonable for a company like Microsoft to become a major player in the eBook market. I'm actually very happy to see this. I don't want to see Amazon hold a monopoly on the eBook market.

Just like Amazon sells the unused capacity of the servers running their own stores

This isn't true.

http://www.quora.com/Amazon/How-and-why-did-Amazon-get-into-...

"The excess capacity story is a myth. It was never a matter of selling excess capacity, actually within 2 months after launch AWS would have already burned through the excess Amazon.com capacity. Amazon Web Services was always considered a business by itself, with the expectation that it could even grow as big as the Amazon.com retail operation."

If that's true, then it is even better for Microsoft because Amazon would bring no competitive advantages to the fight that they could not replicate.

Not sure why anybody would view that as a plus.

> They have Azure to compete with AWS, and now they want to make a run at the Kindle.

I get Azure, but I don't see why Microsoft are starting a fight on another front. The US ebook market could be up to $7bn by 2016, but B&N will have to invest a hell of a lot to keep their 25% market share with the price of Kindles being driven down all the time. (And let's not even mention iPad.)

> Investing in B&N right now actually seems pretty smart.

For almost anyone except Microsoft, IMO.

> B&N is in need of help, and for MSFT to start an eBook business from scratch would be very expensive.

I agree. I just think this is a fight Microsoft should be skipping.

> Microsoft offers more than just software.

Agreed.

> $300 million doesn't seem unreasonable for a company like Microsoft to become a major player in the eBook market.

Maybe I don't get it because I don't see anyone using Windows phones or tablets. I don't see anyone using the Nook, either, although apparently I should see 1/4 e-book readers using one.

The money is being spent on international rollout and Windows [mobile] software development. Great. Now they're just reliant on Microsoft making a dent in the Android/iOS consumer love-in to gain traction there.

> I'm actually very happy to see this. I don't want to see Amazon hold a monopoly on the eBook market.

Totally agree that competition is a healthy thing. I'm just skeptical that we'll be looking back in ten years' time at an e-book market in which MS/B&N are anything other than utterly marginalised.

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