5 ms·

Microsoft Makes $300M Investment In Barnes-Noble E-books Subsidiary

36 points by iProject 15y ago

obtino 15y ago
Unsurprisingly, thanks to this deal, the patent dispute has been settled. Here I was thinking that B&N would be the company which finally ended Microsoft's ludicrous patent claims over Android.
- nextparadigms 15y ago
  Now that you mentioned it, maybe Microsoft was afraid not only of losing a few hundred million dollars to B&N (which they ended up paying anyway in this investment, on top of what the digital division of B&N was worth), but that they will further invalidate more of what they thought were their "important" patents that they are using to get money from other companies. Was it Motorola or B&N that invalidated 6 out of 7 of their patents? I think both managed to invalidate quite a few. If only the other companies would grow a pair, too. Who knows, maybe Microsoft will end up investing in them, too, just like with B&N.
  - ZeroGravitas 15y ago
    This is the only explanation of this that makes sense to me. I love how they slip the standard "royalty-bearing licence" text into an agreement when they're giving a company widely regarded as struggling nearly 0.3 bilion dollars. I assume the only reason the other firms aren't revolting over this is that they already secretly negotiated better deals which led to their agreements, again with the publicity highlighting the "royalty payments to Microsoft" and nothing else about the deals.
btipling 15y ago
I realize there is more to the deal than just the Nook Color/tablets, but I think it is interesting to imagine that either the Nook will continue to run Android and Microsoft will now be involved with selling Android devices or existing apps already purchased will not work on future versions of a non-Android Nook device.
- pdubs 15y ago
  I'd imagine that Microsoft doesn't really care what the device runs. The money's in the content, not the hardware.
  - rbanffy 15y ago
    Microsoft has a lot at stake - WP7, as it is now, lacks credibility and that's absolutely critical in this "post-PC" world. Nooks running WP7 (and abandoning Android) could generate some.
    - joenathan 15y ago
      They would run WindowsRT if anything, Microsoft is only using WP for phones.
      - rbanffy 15y ago
        IIRC, Microsoft has said WP8 will be based on the same core as Windows 8, so, whatever the tablet runs, will be a successor of WP7.
        joenathan 15y ago
        People have speculated that is what MS will do, but MS has never said that.
        rbanffy 15y ago
        You are right. Microsoft has, so far, been ambiguous about the rumors about W8 and WP8 common infrastructure.
georgespencer 15y ago
Can anyone think of any compelling reasons as to why this won't be another headstone in the graveyard of average acquisitions/investments made by Microsoft? http://en.wikipedia.org/wiki/List_of_mergers_and_acquisitions_by_Microsoft http://en.wikipedia.org/wiki/List_of_mergers_and_acquisition...
- deleted 15y ago
  [deleted]
- dkrich 15y ago
  They have Azure to compete with AWS, and now they want to make a run at the Kindle. Investing in B&N right now actually seems pretty smart. B&N is in need of help, and for MSFT to start an eBook business from scratch would be very expensive. Microsoft offers more than just software. Just like Amazon sells the unused capacity of the servers running their own stores, Microsoft can do the reverse, using the unused capacity sold on Azure to host their own products. $300 million doesn't seem unreasonable for a company like Microsoft to become a major player in the eBook market. I'm actually very happy to see this. I don't want to see Amazon hold a monopoly on the eBook market.
  - dchest 15y ago
    Just like Amazon sells the unused capacity of the servers running their own stores This isn't true. http://www.quora.com/Amazon/How-and-why-did-Amazon-get-into-the-cloud-computing-business/answer/Werner-Vogels http://www.quora.com/Amazon/How-and-why-did-Amazon-get-into-... "The excess capacity story is a myth. It was never a matter of selling excess capacity, actually within 2 months after launch AWS would have already burned through the excess Amazon.com capacity. Amazon Web Services was always considered a business by itself, with the expectation that it could even grow as big as the Amazon.com retail operation."
    - dkrich 15y ago
      If that's true, then it is even better for Microsoft because Amazon would bring no competitive advantages to the fight that they could not replicate. Not sure why anybody would view that as a plus.
mikexstudios 15y ago
BKS stock was up close to 90% at opening and is currently up 64.84%.
- thematt 15y ago
  It's all a short-squeeze. Today's trading has little to do with actual valuation.
rbanffy 15y ago
So, B&N licensed Microsoft's patents for minus US$300M and a WP7 app... That's probably the correct valuation for them.
cek 15y ago
My first reaction: I feel pain for the old Microsoft Reader team, and Bill Hill, who pioneered a bunch of e-reading stuff and were shut down last year. Sucks being a victim of Microsoft's not trusting its visionaries. My second reaction: Microsoft just paid B&N $300M to ensure that Android continues to fragment. B&N now has the resources to really take Android forward in whatever direction it wants.
- thematt 15y ago
  Does B&N really have those resources though? At their current burn-rate, Microsoft gave B&N a few quarters of extra runway. It's not clear that the underlying fundamentals have changed all that much though.
jbigelow76 15y ago
Here's hoping I can soon run Windows 8 on my rooted Nook 2. (not holding my breath though)
zargon 15y ago
I don't understand the commentary about B&N possibly spinning off the subsidiary or selling it to Microsoft. Nook is B&N's only hope of survival.

36 points by iProject 15y ago

Unsurprisingly, thanks to this deal, the patent dispute has been settled. Here I was thinking that B&N would be the company which finally ended Microsoft's ludicrous patent claims over Android.

nextparadigms 15y ago
Now that you mentioned it, maybe Microsoft was afraid not only of losing a few hundred million dollars to B&N (which they ended up paying anyway in this investment, on top of what the digital division of B&N was worth), but that they will further invalidate more of what they thought were their "important" patents that they are using to get money from other companies. Was it Motorola or B&N that invalidated 6 out of 7 of their patents? I think both managed to invalidate quite a few. If only the other companies would grow a pair, too. Who knows, maybe Microsoft will end up investing in them, too, just like with B&N.
- ZeroGravitas 15y ago
  This is the only explanation of this that makes sense to me. I love how they slip the standard "royalty-bearing licence" text into an agreement when they're giving a company widely regarded as struggling nearly 0.3 bilion dollars. I assume the only reason the other firms aren't revolting over this is that they already secretly negotiated better deals which led to their agreements, again with the publicity highlighting the "royalty payments to Microsoft" and nothing else about the deals.

btipling 15y ago

I realize there is more to the deal than just the Nook Color/tablets, but I think it is interesting to imagine that either the Nook will continue to run Android and Microsoft will now be involved with selling Android devices or existing apps already purchased will not work on future versions of a non-Android Nook device.

pdubs 15y ago
I'd imagine that Microsoft doesn't really care what the device runs. The money's in the content, not the hardware.
- rbanffy 15y ago
  Microsoft has a lot at stake - WP7, as it is now, lacks credibility and that's absolutely critical in this "post-PC" world. Nooks running WP7 (and abandoning Android) could generate some.
  - joenathan 15y ago
    They would run WindowsRT if anything, Microsoft is only using WP for phones.
    - rbanffy 15y ago
      IIRC, Microsoft has said WP8 will be based on the same core as Windows 8, so, whatever the tablet runs, will be a successor of WP7.
      - joenathan 15y ago
        People have speculated that is what MS will do, but MS has never said that.
        rbanffy 15y ago
        You are right. Microsoft has, so far, been ambiguous about the rumors about W8 and WP8 common infrastructure.

georgespencer 15y ago

Can anyone think of any compelling reasons as to why this won't be another headstone in the graveyard of average acquisitions/investments made by Microsoft? http://en.wikipedia.org/wiki/List_of_mergers_and_acquisitions_by_Microsoft http://en.wikipedia.org/wiki/List_of_mergers_and_acquisition...

deleted 15y ago
[deleted]
dkrich 15y ago
They have Azure to compete with AWS, and now they want to make a run at the Kindle. Investing in B&N right now actually seems pretty smart. B&N is in need of help, and for MSFT to start an eBook business from scratch would be very expensive. Microsoft offers more than just software. Just like Amazon sells the unused capacity of the servers running their own stores, Microsoft can do the reverse, using the unused capacity sold on Azure to host their own products. $300 million doesn't seem unreasonable for a company like Microsoft to become a major player in the eBook market. I'm actually very happy to see this. I don't want to see Amazon hold a monopoly on the eBook market.
- dchest 15y ago
  Just like Amazon sells the unused capacity of the servers running their own stores This isn't true. http://www.quora.com/Amazon/How-and-why-did-Amazon-get-into-the-cloud-computing-business/answer/Werner-Vogels http://www.quora.com/Amazon/How-and-why-did-Amazon-get-into-... "The excess capacity story is a myth. It was never a matter of selling excess capacity, actually within 2 months after launch AWS would have already burned through the excess Amazon.com capacity. Amazon Web Services was always considered a business by itself, with the expectation that it could even grow as big as the Amazon.com retail operation."
  - dkrich 15y ago
    If that's true, then it is even better for Microsoft because Amazon would bring no competitive advantages to the fight that they could not replicate. Not sure why anybody would view that as a plus.

mikexstudios 15y ago

BKS stock was up close to 90% at opening and is currently up 64.84%.

thematt 15y ago
It's all a short-squeeze. Today's trading has little to do with actual valuation.

rbanffy 15y ago

So, B&N licensed Microsoft's patents for minus US$300M and a WP7 app... That's probably the correct valuation for them.

cek 15y ago

My first reaction: I feel pain for the old Microsoft Reader team, and Bill Hill, who pioneered a bunch of e-reading stuff and were shut down last year. Sucks being a victim of Microsoft's not trusting its visionaries. My second reaction: Microsoft just paid B&N $300M to ensure that Android continues to fragment. B&N now has the resources to really take Android forward in whatever direction it wants.

thematt 15y ago
Does B&N really have those resources though? At their current burn-rate, Microsoft gave B&N a few quarters of extra runway. It's not clear that the underlying fundamentals have changed all that much though.

jbigelow76 15y ago

Here's hoping I can soon run Windows 8 on my rooted Nook 2. (not holding my breath though)

zargon 15y ago

I don't understand the commentary about B&N possibly spinning off the subsidiary or selling it to Microsoft. Nook is B&N's only hope of survival.