Why Microsoft Should Have Invested in Nook

by Rich on May 2, 2012

Who knows what evil lurks in the hearts of men? I imagine anyone taking a large investment from Microsoft spends at least a moment wondering what The Shadow knows that they don’t.

Microsoft’s $300 million investment in Barnes and Noble’s Nook subsidiary turned heads, and is seen as an interesting, if confusing effort for Microsoft to get back into ebooks, and to find early traction for Windows 8 devices.

I think there’s a much better reason for them to have made the investment.

Apple’s wild success with its mobile devices is closely tied to the strength of iTunes stores: apps, music, video, and, to a lesser extent, books. Anyone who uses an Apple device knows where to go and knows how to get what they want. iTunes has its problems, but it’s available, it’s comprehensive, and it works.

Google, with their rebranding of the Android Marketplace as Play, is trying to build the ecosystem Apple has in the iTunes stores. They see the value in a one stop shop.

Amazon and Kindle are exactly the same.

So what about Microsoft and Barnes and Noble? Microsoft has an app store for Windows Phone, but they don’t have all of the other content. Barnes and Noble already sells ebooks on the Nook, plus music and video in physical distribution. It seems a shorter hop to take those existing distribution relationships and turn them into working electronic relationships than it does for Microsoft to create them from whole cloth.

Purchasing content for Nook needs a lot of work and polish. Barnes and Noble has struggled there, but they’re really a retailer, not a software company.

If Microsoft is smart about this, Nook will be the way to buy content for Windows mobile devices. With just a $300 million investment, Microsoft got a big jumpstart on a complete content ecosystem.

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