Issues of competition and cooperation are never simple in the technology industry, but Microsoft’s surprise $300 million investment in Barnes & Noble’s new Nook subsidiary this morning puts Amazon further into the category of rival when it comes to its neighbor on the other side of Lake Washington.
Barnes & Noble and Microsoft aren’t giving a lot of details on their plans, but already the partnership is raising speculation about the possibility of a Windows-based e-reader from Barnes & Noble and Microsoft.
Mary Jo Foley of ZDNet points back to a slide in which Microsoft exec Kevin Turner showed a dedicated e-reader as part of the emerging “unified ecosystem” of devices from Microsoft and its partners.
Windows 8 will work on ARM-based processors, such as the Texas Instruments chip that currently powers the Nook tablet.
Amazon offers Kindle apps for Windows and Windows Phone, but with the release of the Kindle Fire, the Seattle company has become more of a direct competitor to Microsoft, as well. And the Kindle Fire is doing particularly well, now representing more than half of the U.S. market for Android tablets.
Microsoft and Amazon are already competitors in other areas, including cloud computing.
Longtime financial analyst Rick Sherlund of Nomura Research writes in a note to clients this morning, “Our view is that Microsoft will want to make sure that there are alternatives to Amazon … for digital content and make sure there is a counter balance to Apple’s growing partnerships for content and creation of interactive educational content.”
The irony here is that Microsoft sued Barnes & Noble over the use of Android in the Nook a year ago. Barnes & Noble countered by accusing Microsoft of “anti-competitive behavior in the mobile operating system market.”
The companies settled their patent litigation as part of the announcement this morning.
As we noted in our story earlier today, Barnes & Noble is still considering an outright spin-off of its Nook unit, and Microsoft would now be a leading candidate to acquire that business if that were to happen — in which case things would get really interesting around here.