Nook Woes Deepen As Microsoft And Barnes & Noble Scale Back Partnership

The relationship between Microsoft and Barnes & Noble appears to be cooling after news emerged that the two companies are revising their partnership deal.

The scaling down of their partnership deal is significant considering that it was only last year that Microsoft considered purchasing Nook Media’s ebook business for a reported $1 billion (£602m).

Changing Priorities?

The two companies had formed their partnership back in October 2012, when they created Nook Media, a business comprised of Barnes & Noble’s Digital and College businesses. Microsoft invested $300 million (£180m) in return for a 17.6 percent stake in the joint venture.

But now according to the Wall Street Journal, the two companies have revised their partnership deal to allow the bookseller to stop developing its Nook e-reading app for Windows-based devices.

Barnes & Noble reportedly said it would stop work on apps for Windows 8 computers, phones and tablets, and instead support a possible Microsoft-created digital-reading service or app, known as  “the Microsoft Consumer Reader.”

Nook Woes

The news that the partnership deal has in effect been scaled down comes amid problems for Barnes & Noble, with some predicting it could drop its Nook tablet division altogether and was reportedly considering pulling its devices from the market because of poor sales.

Last month a source from inside Barnes & Noble told Business Insider that the company had eliminated its entire Nook hardware team. That claim was denied by the company, although it did confirm that some of its employees had recently been laid off.

“We’ve been very clear about our focus on rationalising the Nook business and positioning it for future success and value creation,” a spokesperson said in February. “As we’ve aligned Nook’s cost structure with business realities, staffing levels in certain areas of our organisation have changed, leading to some job eliminations. We’re not going to comment specifically on those eliminations.”

The spokesperson did however say that Barnes & Noble remained committed to the Nook group.

Prior to that in January, Barnes & Noble revealed that several key Nook executives were leaving the company.

A Microsoft spokesman told the WSJ that the company is “always looking for ways to evolve and innovate on our app experiences for customers.” He reportedly declined to offer further details about the consumer-reader platform.

A Barnes & Noble spokeswoman was quoted as saying that the company looks “forward to continuing our partnership and expanding the availability of Nook content.”

Originally released as a grayscale e-reader, later generations of the Nook aimed to compete with popular tablet devices such as Amazon’s Kindle Fire HD and Google’s Nexus 7, featuring a tweaked version of Android Ice Cream Sandwich but with Barnes & Noble’s own store installed.

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