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Microsoft-Barnes & Noble deal could be a benefit to consumers

Consumer Reports News: April 30, 2012 11:08 AM

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Barnes & Noble announced today that it would split off its digital-book business and give Microsoft a 17.6-percent stake in the new unit, resulting in a $300 million investment by the computing giant. This announcement could be good news for consumers, since it may help the bookseller in competing with Amazon in e-book readers and the content and services sold for them.

The new funds, say analysts, should bolster B&N in its pitched battle for market share in e-books with Amazon—and that cutthroat competition has been excellent for buyers of e-books and e-book devices over the past few years. Since B&N launched its first Nook e-book reader in 2009, prices for Nooks and Amazon Kindles have dropped from around $300 or so in 2009 to $100 or less for some models.

The companies have also competed over the weight of their devices and over innovative new features, such as the GlowLight screen that B&N recently added to its Nook Simple Touch. That's resulted in generally close rankings between the two companies' devices, which tend to dominate the top of our Ratings of e-book readers (available to subscribers).

The Microsoft stake comes at an important time for B&N. With some publishers settling federal antitrust lawsuit over price-fixing, Amazon has begun to reduce the prices of some of its e-book titles, a move that analysts say may put pressure on B&N to follow suit.

And where Amazon sells a host of other goods and services to its customers, which can help offset possible losses on e-books, B&N basically sells only books—so it's more vulnerable to a drop in prices for their digital editions.

Microsoft to Invest in Barnes & Noble's Nook [Wall Street Journal]
U.S. Files Antitrust Lawsuit Against Apple, Hachette [Bloomberg]

Paul Reynolds

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