News

Microsoft Nixes Nook Plans for New 'Consumer Reader' App

• By Kurt Mackie
• March 14, 2014

Microsoft and bookseller Barnes & Noble are refocusing their collaboration on a new reader app, according to a B&N 8-K Securities and Exchange Commission filing.

The two companies are essentially modifying the terms of an agreement reached in October 2012 concerning a partnership on B&N's Nook electronic-reader devices. The 8-K filing states that B&N can back away from collaborating on a Windows Phone app. Also, instead of distributing a Windows Nook app, B&N can collaborate with Microsoft on something described as the "Microsoft Consumer Reader."

It's not clear what the Microsoft Consumer Reader app might be, but other Microsoft products suggest clues. For instance, Microsoft rolled out a reading mode for Microsoft Word 2013 that formats text into multiple columns and adds tools such as highlighters and comment panes. In addition, Internet Explorer 11 for Windows 8.1 includes a new reading view feature that offers up Web content in print-like layouts using Microsoft's new Sitka font to optimize the readability of small text. So it seems that Microsoft development teams have already worked on translating DOC formats and HTML formats into print-like reading formats.

Veteran Microsoft reporter Mary Jo Foley, who unearthed the 8-K filing, described such integration efforts at Microsoft as part of an "active reading" development project. She speculated in a post this week that Microsoft had two similar-themed apps in the works, a code-named "Office Reader" app and a reader app for Xbox, which might be one and the same. The Office Reader app translates "Web pages, Office documents, PDFs, e-books and textbooks," according to reporting by The Verge.

Here is how B&N's Form 8-K, dated March 10, describes the modified venture with Microsoft:

On March 10, 2014, Barnes & Noble, Inc. (the “Company”) entered into an amendment (the “Amendment”) to its existing commercial agreement (the “Commercial Agreement”) between the Company and Microsoft Corporation (“Microsoft”).  Pursuant to the Amendment, NOOK Media LLC (“NOOK Media”) and Microsoft agreed to co-branding within the Microsoft Consumer Reader for reading content delivered by NOOK Media.  The Amendment also provided that subject to certain conditions NOOK Media would be permitted to discontinue distributing the NOOK Windows app and will cooperate in good faith with Microsoft to transition users to the Microsoft Consumer Reader.  Microsoft and NOOK Media also agreed to updated revenue sharing to address this possibility.  The Amendment also permits NOOK Media to cease efforts with respect to a Windows phone app.   Portions of the Amendment were redacted based upon a request for confidential treatment filed with the Securities and Exchange Commission.

Microsoft's relations with B&N might be considered "twisted" not just because of this latest modified deal, in which B&N appears to be backing away from some earlier commitments. The deal arose in a seemly bizarre arrangement in which B&N licensed Microsoft patented technology along with spinning off its textbook business while getting a $300 million investment in the spinoff (called "Nook Media") from Microsoft.

That deal came after Microsoft sued B&N for patent infringement based on B&N's use of Linux in its Nook devices. B&N was one of the few companies, besides Google-owned Motorola Mobility, to offer much legal resistance to Microsoft's broad assertions that Linux infringed its patent holdings. While B&N lost the legal scuffle, doubt over Microsoft's claims was cast in the process.

The modified deal outlined by B&N's Form 8-K suggests that Microsoft may have just bought a share in B&N's college textbook business with the $300 million deal. That deal also removed some nasty litigation from Microsoft's books. Possibly, Microsoft may have some general electronic-reader app in the works that doesn't require the sort of tight collaboration with B&N as was originally outlined.