Microsoft, Barnes & Noble agree to halt development of Nook app for Windows

nook tabletThanks to a revised agreement with Microsoft, Barnes & Noble will no longer develop a Windows app for its Nook e-reader.

In an update to a pact formed two years ago, Microsoft agreed to allow the bookseller to stop working on apps for the Windows platform and instead invest resources toward a “Microsoft Consumer Reader,” as ZDNet’s Mary Jo Foley notes.

Foley reports that the changes, which were noted in an SEC filing, will not result in a dedicated Microsoft e-reader, but rather an e-reading app potentially from Microsoft Office and Xbox that would use content from Nook Media.   

Microsoft invested $300 million for a 17.6 percent stake in the Nook business back in 2012 but results from the partnership between the companies have been minimal as Barnes & Noble struggles to keep up with Amazon and Apple in the e-reader space. The bookseller recently laid off a number of employees in its Nook division.

Barnes & Noble stock has remained steady today at around $21.50 per share.

Here’s the key excerpt from the SEC filing …

On March 10, 2014, Barnes & Noble, Inc. (the “Company”) entered into an amendment (the “Amendment”) to its existing commercial agreement (the “Commercial Agreement”) between the Company and Microsoft Corporation (“Microsoft”).  Pursuant to the Amendment, NOOK Media LLC (“NOOK Media”) and Microsoft agreed to co-branding within the Microsoft Consumer Reader for reading content delivered by NOOK Media.  The Amendment also provided that subject to certain conditions NOOK Media would be permitted to discontinue distributing the NOOK Windows app and will cooperate in good faith with Microsoft to transition users to the Microsoft Consumer Reader.  Microsoft and NOOK Media also agreed to updated revenue sharing to address this possibility.  The Amendment also permits NOOK Media to cease efforts with respect to a Windows phone app.   Portions of the Amendment were redacted based upon a request for confidential treatment filed with the Securities and Exchange Commission.
The Company previously entered into Amendment No. 1 (the “First Amendment”) to the Commercial Agreement, effective as of October 4, 2012.  The First Amendment is being filed with this Report for the sake of completeness as it was not previously filed because the Company determined the modifications contained in the First Amendment were not material.  The First Amendment addressed the required functionality for the first version of the NOOK Windows app in order to permit NOOK Media to begin receiving revenue share advance payments.  Portions of the First Amendment were redacted based upon a request for confidential treatment filed with the Securities and Exchange Commission.