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May 09, 2013

Microsoft Has Its Eyes on Nook Media LLC

By Steve Anderson, Contributing TMCnet Writer

New reports have emerged suggesting that Microsoft (News - Alert) may have an interest in the digital assets of Nook Media LLC. According to a set of internal documents, the Nook operation would get a bit of retooling under Microsoft, and all for a $1 billion price tag (News - Alert). But the documents didn't just reveal Microsoft's interest; they also revealed some of Nook Media's own potential plans.



The internal documents in question revealed that Microsoft would redeem preferred units in Nook Media, and in turn get the digital operation, which includes, reportedly, the e-books and the Nook line of e-readers and tablets. But the reports also go on to suggest that Nook Media is out to shut down the tablet business by the end of the 2014 fiscal year, instead focusing on delivering content to third party systems, which are also said to be up for introducing in 2014.

The Nook tablet line won't be immediately dropped, according to the reports, as instead the decline will be natural, trying to get people to segue as smoothly as possible into a world where Nook doesn't exist, except as part of a different hardware system. Just who will be bringing out that hardware is unclear as yet; the documents don't state outright if the new tablets will be a third-party make, Microsoft's Windows 8 devices, or a combination of the two.

At last report, there have been 10 million Nook devices sold, and of those 10 million devices sold, there are over seven million active subscribers in the field. The Nook app, meanwhile, is available on all the major platforms, including iOS, Android (News - Alert) and, yes, Windows. Nook Media, meanwhile, separated from the retail portion of the larger operation, with Microsoft also putting up a $300 million investment to get a 16.8 percent stake. Back then, Microsoft reportedly made that investment as a way to get Nook content to Windows 8 tablets.

With the Nook division somewhat in decline after a less than sound holiday, and the Kindle Fire HD currently selling at the same price as the Nook HD+, it's looking like Nook is falling behind its competition at Amazon. So it would make an interesting opportunity for Microsoft to come in and start offering Windows 8 tablets that run Nook Media content.

Microsoft has had one major point against it pretty much since its inception; it came late to the market. The iPad and Android lines had already built a market when Microsoft arrived, so entering the market at this stage was going to be a tall order, unless Microsoft can offer something that neither iPad nor Android lines do. Some suggest that Microsoft has done just that with its control scheme, but others would find that a bit too underwhelming to get people to switch from entrenched brands. But bringing in a content source that would be best on Microsoft tablets – now that might get some fence-sitters to make the move.

This is still early-stage stuff, but Microsoft may well have an opportunity here to offer up an experience not easily replicated elsewhere. If it controls a massive stock of content, it may well, like Amazon, be able to offer a complete experience. Add on the possibilities offered by Xbox Live and the like – many of the indie games on Xbox Live Arcade could probably make a jump to tablet without incident – and there's a serious potential that the tablet race may become a three-way horse race instead of just a battle for third place.




Edited by Alisen Downey
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