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Microsoft Dives Into the E-Book (But Not the Tablet) Nook

The printed word made it all the way from one Gutenberg to another -- Johannes to Steve, although Steve picked up an extra "t" somewhere along the way -- before  finally giving way to the inevitability of pixels, screens and bookmarks not made of plastic and given away for free at the local bookstore. (On a side note, the local bookstore isn't around anymore, either. But we digress.)

Kindle, Nook, iPad, HP Touchpad (hey, we are out there!) -- the age of the e-reader is not only here but has been here for a while. So it's about time Microsoft jumped into it. Late, but not fashionably, to the trendy party as usual, Microsoft took a big stake in the e-reader game this week by pumping a few hundred million dollars into Barnes & Noble's Nook device and the subsidiary-type thingy that B&N will create to produce it.

For its money, Microsoft gets a final nod to patent humility from B&N, a share in e-book revenues and somebody to actually create a reader for Microsoft mobile devices to compete with Amazon's Kindle device and app. Everything considered, given Microsoft's mounds of cash and Barnes & Noble's need for, well, cash, this actually sounds like a pretty good deal for both parties. What it does not sound like is a grand entry for Microsoft into the tablet game.

Nothing we've seen has made this out yet to be a tablet play, but reasonable questions are starting to arise about whether the Nook will eventually run Windows 8 (or, more specifically, the horribly named Windows RT) rather than the Android operating system it runs now. And it very well might. For Microsoft, that would be a nice swipe at Google, although fleecing Android device dealers with patent agreements will likely prove to be a lot more profitable.

What puzzles us is that most reports seem to place Microsoft's investment -- it's not a buyout of anything -- as a move to compete with the iPad. We don't get this at all. Competing with Amazon and the Kindle? Sure. Making some money by helping bail out a struggling company that happens to have a great product? Absolutely. Gaining a little bit of a foothold in the mobile-device space by possibly replacing Android on the Nook? Yeah, that would be a nice benefit.

But competing with the iPad? No, that's not what's happening here. First of all, the Nook, nice little machine that it is, is not an iPad, or even an HP Touchpad (still out there!). Like the Kindle Fire, it's primarily a device for consumption and not really one for creation. It's great for reading, watching videos (although we can't remember which one, the Fire or the Nook, actually supports the Netflix app) and basically staying entertained in a handheld form.

It's not meant to do everything an iPad, or even an Android tablet or Touchpad (yes!) will do. Those are devices designed to darn near replace laptops, allowing for much more creation and productivity than something like the Nook can offer. The Nook competes with the iPad only on the fringes of an almost entirely different market. (It might be overkill to have both a Nook and an iPad, but it's not unthinkable. A single consumer having, say, a Samsung Android tablet and an iPad, though, is fairly unlikely.) So, Microsoft's investment won't help Windows' standing as the bottom-of-mind OS for mobile devices, particularly tablets.

Now, will Microsoft move in further and try to turn the Nook into a full-fledged Windows tablet? Maybe...but we kind of doubt it. The Nook is great for what it is, a consumption machine. As for full-on tablets, Microsoft will have to pursue that market in some other way -- a way that will likely cost more than a few hundred million dollars. And as a competitor, the iPad might just turn out to be a little stiffer than the Kindle. If only the Gut(t)enbergs had known what they were getting us into.

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Posted by Lee Pender on April 30, 2012


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