NEW YORK (AP) -- Books and bits united Monday as Microsoft provided an infusion of money to help Barnes & Noble compete with top electronic bookseller Amazon. In exchange, Microsoft gets a long-desired foothold in the business of e-books and college textbooks.
With Microsoft Corp.’s $300 million investment, the two companies are teaming up to create a subsidiary for Barnes & Noble’s e-book and college textbook businesses. Microsoft is taking a 17.6 percent stake in the venture.
The agreement underscores the importance of electronic bookstores as traditional booksellers and technology companies jockey for position in the increasingly competitive market. While no definitive numbers exist, e-books are believed to account for some 20 percent of book sales in the U.S.
For Microsoft, the investment is a way to get back into the e-book business. It has dabbled in the field since at least 2000, but never developed much traction. It was Amazon that blew the market open with the 2007 launch of the Kindle, creating a potent challenge to Barnes & Noble’s brick-and-mortar bookstores.
Major Microsoft competitors Apple and Google now have their own e-book stores. All three companies are building businesses that encompass hardware, software and content in an "ecosystem," and e-books and readers are part of the puzzle.
With that perspective, the deal is very important, said Walter Pritchard, an analyst with Citigroup.