Microsoft & Barnes and Noble sittin' in a tree...

[Kali Yuga]

Originally Posted by wizwor

MSFT (phone, pc, tablet, xbox)+B&N+Netflix > Amazon or iTunes. This is how Microsoft becomes relevent in the tablet/content delivery space.

Zune failed. Early MS tablet PC's failed. Windows Media Center bombed. Windows mobile OS's are repeated failures. Nokia is still flailing after ditching Symbian for Windows Mobile. Xbox is a success -- after years of losses. MS isn't likely to rely on an unaffiliated partner to deliver its content.

This is a lifeline for B&N, and may well buy them enough time to make the Nook profitable. However, it will also mean that B&N is going to expend a lot of time, and a big slice of that $300m investment, migrating the platform to Win8 and integrating any MS services or offerings that are part of the deal.

It could be good, but it could be a disaster. MS has deep pockets and tech experience; B&N has the consumer sales side, and were sharp enough to wring $600m out of MS. But MS has failed repeatedly with its content plays and can't brand its way out of a paper bag, and B&N has flubbed repeatedly with technology and their brand will suffer if they have to close more stores. They could complement each other, or trip each other up.

The Nook apparently cost B&N $200 million so far. MS is apparently investing $300 million now, and another $300 over the next 5 years, and Win8 is already aiming for tablets. Microsoft could have easily invested $600m over 5 years to put together their own international ebook store, albeit with a longer delay and without a brand.

This is not just about MS "getting into content." It's about blocking Google and other competitors from getting a piece of the Nook business when it goes on the auction block.

Hopefully, this will work out well for B&N. We'll find out in a year or two.

[fjtorres]

Originally Posted by Kali Yuga

It's about blocking Google and other competitors from getting a piece of the Nook business when it goes on the auction block.

Or keeping Nook off the chopping block in the first place.

There are many ways to sculpt the competitive environment to your advantage; keepaway can be as effective (and often cheaper) than takeaway.

[wizwor]

Originally Posted by Kali Yuga

Zune failed. Early MS tablet PC's failed. Windows Media Center bombed. Windows mobile OS's are repeated failures. Nokia is still flailing after ditching Symbian for Windows Mobile. Xbox is a success -- after years of losses. MS isn't likely to rely on an unaffiliated partner to deliver its content.
...
This is not just about MS "getting into content." It's about blocking Google and other competitors from getting a piece of the Nook business when it goes on the auction block.

Hopefully, this will work out well for B&N. We'll find out in a year or two.

I disagree. Zune was the test for Microsoft's Metro interface and the Zune Store was Microsoft's first crack at content distribution. Metro has been ported to the Windows Phone (which Apple founder Steve Wozniak prefers to the iPhone) and Windows 8.

The xbox has been very successful despite entering a market dominated by Nintendo and Sony. Xbox now sells more consoles than either. Both competitors are losing a lot of money.

Microsoft started getting into content with windows media player. It was an addon to XP and there was a media center edition of XP. The windows 7 version of media center is excellent. The xbox extends windows media into the living room.

It should be clear that Microsoft's strategy is to be the on ramp to entertainment at home, at work, and on the run.

What distinguishes the two powerhouses from Microsoft is content -- apps, movies, music, and books. This is the book piece.

[TheLongshot]

Originally Posted by wizwor

The xbox has been very successful despite entering a market dominated by Nintendo and Sony. Xbox now sells more consoles than either. Both competitors are losing a lot of money.

Just as a note, Nintendo is only dropping recently because the Wii is entering EOL and the 3DS stumbled out of the gate. Otherwise, they have done very well. The Wii is still the top seller overall for this console generation, even with the deeper pockets of Microsoft and Sony.

Getting back to the subject at hand, you can never count Microsoft out of anything they want to get involved with. Even if something like Zune is a failure, it is very likely that the next version will be better. Course, the real question is, is this going to be the traditional Microsoft, or is this all going to end up being Ballmer's folly? That really is an open question right now, but it hasn't been looking good for Microsoft recently. And who knows if Windows 8 is going to be a good tablet OS.

[JoeC]

So will I be able to read all of my "old" MS Reader/LIT books on the Nook?

[stonetools]

To make the transition from print and B&M (mostly) to online and ebook (mostly) is damn difficult, and isn't the easy path most Mobile Readers think it is. For BN, it requires luck, skill, money, and technical expertise. BN has to come up with the first two by itself, but MSFT as a partner has plenty of the last two.
With MSFT as an investor, BN will also be able withstand the coming price war with Amazon, which will reassure investors.

[wallcraft]

Originally Posted by ATimson

Uhh... where have you heard anything about Windows 8 tablets being "severely limited" in their chipset choice? I thought that they would run on pretty much the entire ARM gamut.

From Building Windows for the ARM processor architecture:

Each ARM licensee building these packages takes a different approach to selecting features, making product trade-offs, and designing the complete silicon package. These choices are what bring the diversity of different products built on ARM to the market. There is no single ARM experience, and as we have seen with other operating systems, even the same ARM CPU combined with different components, drivers, and software can yield different types or qualities of experiences. That is why from the start of the WOA project, we have been working with three ARM licensees: NVIDIA, Qualcomm, and Texas Instruments. Each brings different expertise and different approaches, and all will make a unique contribution to WOA. All of them have extremely successful ARM-based products in the market today, from tablets to smart phones to e-readers to embedded devices. We are fortunate to have the support of such amazing partners, and WOA is unique in working with such diversity.

My translation of "WOA is unique in working with such diversity" is "MS has severely limited the choices of what SoC's to use". Introducing a new O/S on high end hardware is not necessarily a bad thing in the long term, since SoC's get more capable over time. In the short term, it means that the devices will be relatively expensive at first and will compete against high end Android tablets and low end Intel laptops.

[Kali Yuga]

Originally Posted by wizwor

I disagree. Zune was the test for Microsoft's Metro interface...

Less than 2% market share as of 2009; hardware pulled late 2011. Fail.

Originally Posted by wizwor

The xbox has been very successful....

MS allegedly spent $7 billion on the xBox, and lost money on it for what, 7 years?

It is successful in the sense that it's popular, established, and a new platform for MS. Turning a profit overall is likely a long way off.

Maybe I ought to revise that claim that $600m would be enough for MS to launch another ebook platform...

Originally Posted by wizwor

It should be clear that Microsoft's strategy is to be the on ramp to entertainment at home, at work, and on the run.

Oh?



I don't view this as MS's big play at content. It's a middle finger at Google, Amazon or any other competitor who could snap up the Nook and extend their business.

[yoho]

Originally Posted by fjtorres

It refers to the Nook ebookstore.

What is going on is that:
1- B&N is spinning off Nook and the ebookstores into a new business.
2- MS is buying 17% of the stock of the "Newco" spinoff.
3- "Newco" will make a Nook App for Windows 8 devices (which they were going to have to do anyway) so that Win8 users can access the Nook ebookstore.
4- B&N gets $300 million to operate "Newco" for a while plus the MS co-sign for any loans "Newco" applies for.

B&N gets a boost, MS gets very little they wouldn't get anyway for a trivial bit of cash.

Business as usual.

Edit: Oh, yes: MS has generally cordial relations with Amazon (and supply tech to Blio) so there's no need to spin this as any kind of message to Amazon.

very clear explanation, i must say. i think B&N is making another step in its e-book business

[ATimson]

Originally Posted by wallcraft

My translation of "WOA is unique in working with such diversity" is "MS has severely limited the choices of what SoC's to use".

That's an... interesting translation. To me, it sounds like they're saying exactly the opposite - that for Windows On ARM they're working on making sure it's compatible with a wide range of hardware, instead of just focusing on one or two chipsets like Apple does with iOS or like Microsoft did with Windows Phone 7.

[wallcraft]

Originally Posted by ATimson

That's an... interesting translation. To me, it sounds like they're saying exactly the opposite - that for Windows On ARM they're working on making sure it's compatible with a wide range of hardware, instead of just focusing on one or two chipsets like Apple does with iOS or like Microsoft did with Windows Phone 7.

The reason they can claim to be unique (working simultaneously with three vendors) is that the chip makers are largely on their own with Linux and Android (each major version of Android has a single reference design from one hardware vendor), but these operating systems are available from all the vendors. It does take them a while to upgrade to the latest Android version, but now you can get Android Ice Cream Sandwich on $50 tablets in China.

I agree that three is better than one, and I don't see any hardware reason why Windows On ARM could not be a success long term. However, the Nook business has been about good quality hardware at a low cost. This isn't 1st generation Windows On ARM territory.

[howyoudoin]

Unless I'm mistaken, the decision by Microsoft to discontinue the Zune hardware line was made because the Windows Phone made it redundant. The Zune hardware line was definitely not popular as it was, but the unpopularity was not the sole deciding factor in discontinuing it.

[murraypaul]

Perhaps I'm oversimplifing, but haven't MS simply bought off B&N's Android patent lawsuit?
They've chucked a relatively small amount of money at a company in financial difficulties, some of which they will get back in royalty payments, and in return a pesky lawsuit has gone away.
They don't need to spend the legal costs, don't face any more disclosure, and have removed one of the bigger opponents to their patent claims, making small fish more likely to settle.

[wizwor]

Originally Posted by Kali Yuga

I don't view this as MS's big play at content. It's a middle finger at Google, Amazon or any other competitor who could snap up the Nook and extend their business.

Businesses do not spend money on symbolic gestures. Businesses do not randomly buy and sell companies. Businesses -- the successful ones, at least -- have a plan to get from one place to another. Microsoft is evolving whether you like it or not. Buckle up -- it's going to be a wild ride.

iPhone is my favorite phone. I did give my opinion that the Windows Phone had superior visual appearance and operation cues that were also more attractive. In my opinion, it sets the mark for user interface. I would recommend it over my Android phones, given that it doesn't yet have the breadth of apps,” he wrote. “I surmise that Microsoft hired someone from Apple and put money into having a role in the UI and appearance of some key apps. I also surmised that Steve Jobs might have been reincarnated at MS due to a lot of what I see and feel with this phone, making me think of a lot of great Apple things."

Steve Wozniak (founder of Apple Computer) on Zune's Metro Interface which is the new brand for Microsoft's computer operating system and phones.

[cgsmom]

Originally Posted by JoeC

So will I be able to read all of my "old" MS Reader/LIT books on the Nook?

That's just what I was thinking. I have quite a few LIT books.