Microsoft has invested £185 million ($300 million) in a new digital venture with US bookseller Barnes and Noble to promote their e-book the Nook.
The deal could make Barnes and Noble’s Nook e-book reader available to millions of new customers, integrating it with the Microsoft’s new Windows 8 operating system which is due to be launched this summer.
The new company will be 82.4% owned by Barnes and Noble, with Microsoft getting a 17.6% stake.
It will include the bookseller’s digital and college education book businesses.
Barnes and Noble did announce at the beginning of the year that it was looking at splitting off its digital business. It said it does not yet know whether it will float the new company.
The Nook e-reader was launched in 2009 to compete with Amazon’s Kindle, allowing users to buy, download and read digital versions of books and magazines.
Traditonal bookseller chains have been struggling to cope with the e-book revolution and some have found it difficult to compete against Amazon’s distribution of cut-price physical books.
The rise of the digital-only e-books and dedicated e-readers has only compounded their problems.
Sales of e-books, with their low production and distribution costs, have now oustripped sales of print titles in many cases.
According to Juniper Research, sales of handheld e-readers have leapt from below 5 million in 2009 to nearly 25 million in 2011.
Amazon’s Kindle service is already available as an app on the Windows 8 operating system, due to launch this autumn.
The Nook’s content will now be available to the growing number of people with mobile devices running Microsoft software.
The Windows 8 operating system is specifically designed to work with touch screens and mobile devices like tablet computers.
Microsoft’s new alliance opens up a whole new online digital battlefront, having teamed up with Nokia to compete in the smartphone market last year.