Will Microsoft Help Barnes & Noble Move Ahead in the E-Reader Battle?

The e-reader war continues with Microsoft Corp. (NASDAQ:MSFT) making the latest move: a $300 million investment in Barnes & Noble’s (NYSE:BKS) Nook reader.

Microsoft’s investment will give it a 17.6 percent stake in a new subsidiary that will develop an application for the Windows 8 operating system based on Nook’s platform.

Plans for a partnership between Nook and an education company that provides textbooks and course material for college students will provide Microsoft with access to the $12 billion education market. “Our complementary assets will accelerate e-reading innovation across a broad range of Windows devices, enabling people to not just read stories, but to be part of them. We’re at the cusp of a revolution in reading,” said Microsoft President Andy Lees.

The deal will allow both Microsoft and Barnes & Noble to be increasingly competitive with Apple Inc. (NASDAQ:AAPL) and Amazon.com Inc. (NASDAQ:AMZN), the creator of the Kindle e-reader. At the start of 2012, Apple announced a plan to sell digital textbooks for iPads, and within 3 days, the company sold 350,000.