Quite a lot has already been conjectured in the wake of Microsoft's decision to invest $300 million in a new joint venture with Barnes & Noble. Is a Windows Nook on the way? Are we witnessing a sly move to poke Google in the eye by fostering Android fragmentation? Or is this part of a longer range effort to help users e-books and articles across myriad devices? Yes to all of the above. But there's not much sense in overthinking this. If you're Steve Ballmer, there's no way that you don't do this deal. First, the $300 million is a rounding error for a company that did $17.4 billion in its most recent quarter. This was chump change next to what Facebook plunked down to buy Instagram and, really, a very small price to pay to get off the sidelines and into a hot market. For Microsoft, it's a low-cost gambit given how badly the company trails in the e-book business. Microsoft, which of course doesn't share that view, tells me that the real battle is only now getting underway. That's a bit delusional, but you have to admire their spunk. And if the gambit succeeds, Ballmer will look prescient, having found a cheap way into a world currently dominated by Amazon and Apple. If Microsoft fails, it's a meaningless tax write-off that won't make a difference to the company's stock (unlike Barnes & Noble, whose shares rose 52% on the news.) Microsoft could also use a partner that knows what it's doing. As Kevin Tofel reminds us, this is not the first time Microsoft has given the e-reading business a try. But big ideas don't always pan out. Microsoft's Windows Pocket PC platform for mobile devices debuted on April 19, 2000. The Microsoft Reader was embedded in the platform, "allowing you to read e-books on the go." For Barnes & Noble, Microsoft's deep pockets are a godsend. Nook or no Nook, the company still struggles with issues that ultimately pushed its former rival Borders into bankruptcy. (Hands please: Who wants to be a big box book retailer in the age of the Internet?) Which is why the new division -- the Orwellian-named Newco -- could eventually wind up on spun out on its own. More immediately, Microsoft's backing should help Barnes and Noble dispel the concerns of any fence-sitters wondering whether the Nook can survive in an increasingly hardscrabble market. My CNET colleague David Carnoy correctly observes that in the commodity world of e-books, uneasy consumers have expressed worry that their purchases might disappear if a company goes out of business. Microsoft's money solves that problem for Barnes & Noble. How do win more customers? In announcing the news, neither company was very specific. Microsoft President Andy Lees went on about how "the option here is to define the future of reading" and that Microsoft sought to become "more than just the platform provider." That covers a lot of ground, but it's still anybody's guess what that will mean. Lees was equally opaque about what comes next -- besides, that is, the obvious step of making a Nook app for Windows 8. That leaves the blogospheric chattering classes to ponder the inner Zen of the moment. Since the Nook runs on Android, it's reasonable to expect Microsoft to press Barnes & Noble to switch to Windows 8 sometime in the future (at least for some Nook models.) All Lees would say was that Microsoft offered several different form factors, price points, and capabilities, leaving the impression that there would be more to talk about at some future date. He also mentioned how Microsoft's "complementary assets will accelerate e-reading innovation across a broad range of Windows devices." Amazon now controls roughly 60% of the e-book business in North America and if CEO Jeff Bezos was listening to today's conference call, he didn't hear anything to lose sleep over. But while Microsoft and its newest best friend aren't doing much beyond making promises on top of promises right now, this story may yet wind up with a happy ending. The Nook has already won its share of good product reviews -- CNET gave it 3.5 out of five stars in its rating -- and there's no reason to believe it wouldn't do equally well equipped with Windows 8, which could be one of the best OS iterations ever produced at Microsoft. For $300 million, it's well worth rolling the dice. What's to lose?
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