Will This New Partnership Hurt Amazon?

Barnes & Noble (NYSE:BKS) has upped the ante in the turf war for e-book market share. Following a $300 million investment from Microsoft (NASDAQ:MSFT), Nook Media will take on responsibility for Barnes & Noble’s digital reading and education business. Microsoft’s investment buys it a 17.6 percent equity stake in the subsidiary, and a dedicated reading app for Windows 8.

Barnes & Noble and Amazon (NASDAQ:AMZN) have been sparring for a while in both the e-book and print publication markets. Barnes & Noble chief merchandising officer Jaime Carey recently said the company would pull Amazon Publishing titles from its stores. Both Amazon and Barnes & Noble are releasing new tablets, and the secret sauce for their success will be content.

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Amazon has come out on top of a series of lawsuits involving major publishers and Apple (NASDAQ:AAPL) that involved price-fixing. Amazon retained the right to determine prices and has continued its strategy of pricing best sellers below the market at $9.99 in order to gain share.

Microsoft may see its investment in Nook Media as a way to compete with Apple’s growing content channels. Windows 8 is slated for release at the end of October, and the platform would be incomplete without robust access to media. Microsoft’s dubious tablet, the Surface, would also need a strong tie to digital content if it is to compete with Apple and Amazon.

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