Microsoft Joins Barnes & Noble in E-Book War

There's a new major player in the battle for the e-book market. Microsoft is investing $300 million in a new Barnes & Noble subsidiary devoted to the bookseller's Nook e-reader plus its College division. Microsoft will have a 17.6% stake in the company (currently dubbed "Newco"), valued at $1.7 billion. The move could set a course for B&N to spin off the subsidiary as its own firm—one Microsoft could potentially buy—while possibly providing a boost to the Windows 8 tablet and Windows Phone.

To better fight the tablet war with Amazon and Apple, Microsoft has been seeking content for its upcoming Windows 8 tablets; the B&N deal could be a big step forward. The companies are already planning a Nook application for Windows 8. Meanwhile, the union of B&N's College and Nook ventures makes sense, TechCrunch notes, thanks to the intertwining of e-books and education—an area in which Apple has already made major inroads. (More Microsoft stories.)