Just about two months ago, Barnes and Noble and Microsoft announced that B&N would spin off their NOOK and college bookstore businesses into “Newco”, to be jointly owned by both companies. Obviously this has been good news for B&N’s finances, but aside from the press release both sides have been very quiet. There were rumors that B&N would be part of Microsoft’s Surface tablet event, but that was proved wrong.
However, I think Surface tablets are a big part of why Newco was formed. When the joint venture was announced, I pointed out this benefit on the Microsoft end:
As much as this looks like an amazing deal for B&N, it is just as good, if not better, for Microsoft. For a relatively small amount of money, Microsoft has a strong foothold with the #2 ebook company plus a beefed up presence in college bookstores. Apple made a big splash with iBooks 2, but Microsoft and their Windows 8 tablets can be front and center in 630 college bookstores. And with the tie-in to NOOKStudy and the NOOK library, Microsoft could theoretically bundle textbooks, tablets, and software into one affordable, school-store stop. It is going to be hard to break the iPad’s momentum, but this gives Microsoft a big leg up in content, and the ready-made leverage and retail presence from both regular bookstores and college ones.
Now Microsoft has all that PLUS their own hardware to hold it all together. It’s too late for this academic year, but if Surface arrives reasonably quickly, we could see bundles in college bookstores for the 2013-2014 school year. Imagine buying a Surface tablet, and it has all your academic software preinstalled, plus it can be purchased with all your textbooks for the semester already loaded in electronic form and ready to go. Throw in a tech support desk in the bookstore, and you truly have everything you need to get rolling with one purchase. And since Microsoft is a part-owner of the bookstore providing the digital textbooks, there is far less of a licensing and coordination headache.
It remains to be seen if my speculation is even close to accurate, but it does fill in the mysteries of why Microsoft wanted to get involved in ebook stores, AND why they are pumping out their own hardware. You can take this to the corporate world too; companies could bundle Surface tablets with training materials easily, and Microsoft and B&N could insure the reading experience is satisfactory.
I wasn’t super excited about the Surface tablet when it was first announced. However, it came up a few times this weekend, as several people asked me in the course of conversations if I had heard of the new Microsoft tablet. The more I talked about it, the more the dots seemed to connect. What’s your take on the Surface? Is it a trojan horse to get a combined Microsoft/B&N foot in the door of business and digital textbooks, or is it just another tablet? Let us know in the comments!