Microsoft Takes a Bath on Failed Nook Partnership

nook windows 8

After sinking $300 million into Barnes & Noble’s digital reading business, Microsoft is walking away with about $120 in cash and stock—and not much else.

As the Wall Street Journal reports, the two companies have terminated a partnership that began in 2012. At the time, the idea was to create a new subsidiary that included Barnes & Noble’s Nook and college businesses, in which Microsoft would take 17.6 percent ownership. The bookseller is buying back Microsoft’s stake for $62 million and 2.7 million Barnes & Noble shares.

Microsoft and Barnes & Noble were always tight-lipped on what their joint venture—mysteriously known as “NewCo”—would actually do, but one of the immediate benefits, they said, would be a Nook reading application for Windows 8 devices.

Two years later, the Windows app appears to be the extent of their efforts, and even that met its bitter end in March. Amid reports that Microsoft was building its own reading app, the two companies abandoned Nook for Windows and halted development on a Windows Phone version that never saw daylight.

According to the Journal, the split gives Barnes & Noble more flexibility in figuring out the options for its recently spun-off Nook Media unit, including a possible sale. Last quarter, the Nook unit’s revenues fell by 41 percent from the previous year, as both hardware and media sales plummeted.

Why this matters: The two companies working together seemed exciting a couple years ago, when Barnes & Noble was a main contender in the cheap tablet market, and Microsoft was readying a big consumer tablet push with Windows 8. But since then, Microsoft has refocused on being a productivity company, and Barnes & Noble stopped designing its own tablet hardware. The partnership had ambiguous goals to begin with and has since become pointless, making amputation the only reasonable option.

This story, "Microsoft Takes a Bath on Failed Nook Partnership" was originally published by PCWorld.

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