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Microsoft and Barnes & Noble Create E-Book Partnership

Microsoft and Barnes & Noble announced Monday that the companies are joining forces to bolster the Nook's competitive edge against Amazon's Kindle and Apple's iBooks platforms. One of the first benefits of the new agreement will be a Metro-style Nook e-reader app for Windows 8 that will be available to users in the U.S. and internationally.

Amazon already offers a version of its Kindle reader app for Windows 8. The new e-book duo also plans to create Nook-based textbooks to compete with a similar platform from Apple announced in January as part of iBooks 2.

As part of the new partnership, Microsoft will invest $300 million in a new, and as yet unnamed, B&N subsidiary, which will give the software giant a 17.6 percent equity stake in the new company. The two companies also said they have settled their ongoing patent litigation, which includes an agreement where Microsoft will get royalties from Nook e-readers and tablets. It's not clear if the agreement to form the new company was also part of the patent settlement.

Android or Windows 8 Operating System?

Currently, Barnes & Noble relies on a customized version of Google's Android operating system for products such as the Nook Color. It's not clear if the new B&N company might opt to use Microsoft software going forward given the new partnership. There was also no suggestion of what kind of Nook products the company might offer in the future or whether a Nook app for Windows Phone was in the works. Currently, Barnes & Noble offers Nook reader apps for Android, iOS, Mac, and traditional Windows desktop PCs, as well as e-readers and tablets that include the Nook Simple Touch, Nook Color and Nook tablet.

E-books are fast becoming a popular way for people to consume books. Amazon, the world's largest online retailer, routinely reports that Kindle readers and tablets are its most popular selling products. And as of February, about 21 percent of American adults reported reading an e-book during the previous 12 months, a four-percentage-point increase from December, according to a study by the Pew Research Center's Internet and American Life project.

Monday's announcement follows B&N's decision in January to consider spinning off its Nook business.

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