Amazon Kindle Faces Big Trouble as Microsoft Backs Nook Line

Barnes & Noble has finally begun to spin off their Nook brand into its own subsidiary company and Microsoft has jumped at the opportunity to be a major part of that effort.  According to an announcement released jointly this Monday, the software giant will be investing $300 Million into the Nook business thereby acquiring 17.6% equity stake.  This could be bad news for Amazon’s Kindle line, which is already facing some of its toughest competition to date in the realm of eReading thanks to the new Nook Simple Touch w/ GlowLight.

Making things even more pleasant for B&N, this arrangement will also involve the settlement of Microsoft’s ongoing patent litigation the bookseller over certain aspects of the Nook’s design.  Microsoft will now be picking up royalties for all Nook products, but in the end this may result in significant savings compared to the cost of legal defense.  Whether or not that is the case, and admittedly I’m not a lawyer so it is purely speculative, this partnership will open up some major new opportunities for advancing the Nook.

In the immediate future we can expect a Nook app for Windows 8.  This will be an important development for both companies as Microsoft is betting big on the potential for tablets using their new OS while Barnes & Noble will need to be ready for the next major push in operating systems.  The nature of the Metro UI that Windows 8 (and its ARM compatible offshoot Windows RT) uses will actually create an even better reading experience than existing Windows reading apps if done right.

More long-term, Microsoft has already alluded to an interest in using Windows 8 to gain a foothold in the eReader market.  While this was mostly an offhanded remark at a recent event, and could therefore have been meant as a subtle emphasis on how adaptable their new operating system is, buying into as big a player in eReading as the Barnes & Noble Nook line is a fair indication that something more serious is going on.

In the face of this, Amazon has to be wondering what to do next with the Kindle line.  While the Kindle Fire is coming out on top of every other Android tablet on the market today, their Android fork might not quite compare to a properly configured Windows 8 installation powering the next Nook Tablet.  Nothing stops Amazon from following suit and licensing the new OS themselves, of course, but this would likely lose them the ability to completely control the user experience enjoyed under the existing system.  Microsoft will certainly allow locked-down version of their software to circulate, but fragmenting the Metro UI is not going to happen.

This might end up being the first step in a major Android vs Windows 8 fight.  The Kindle Fire holds the majority of non-iPad tablet users, but if a new Nook offered superior hardware and an operating system that shines when compared to Android without increasing the price significantly then the tables could turn.  Amazon still has their content distribution and the tight integration that gives them the edge, but the next Kindle Fire might need to be especially impressive to keep consumer interest going.

4 thoughts on “Amazon Kindle Faces Big Trouble as Microsoft Backs Nook Line”

  1. Does not change a thing for Kindle readers. Still,
    I’m glad Amazon is getting some competition. Kindle
    Touch and Fire is where the content is @ an affordable

  2. I own “Fire” and disagree with 90% of your comments. Will remove your site from my reader.

  3. Blog Kindle (unofficial) would lead one to believe that this was a pro-kindle blog. Your last several efforts seem to indicate otherwise. I could interpret what you are doing as trying to light a fire under Amazon but your analysis comes off as very pro Nook. You need to choose a side, dude… because your readers are beginning to and we’re not satisfied.

  4. Honestly, I’m incredibly pro-Kindle. I tend to use either my Kindle Keyboard or Kindle Fire for hours every day. Amazon has the most amazing combination of content, pricing, and marketing that I’ve ever seen. My issue right now is largely confined to the physical eReaders themselves.

    Since the Nook first hit the market, Amazon and B&N have played back and forth in a way that made for ever-improving products. Lately though, Amazon seems to me to be neglecting the eReader hardware development side of things. They still have the best store and the best content, but it’s fairly sad when the reading experience is slightly better using a Nook Simple Touch that I rooted to run the Kindle app than with a Kindle Touch. The Touch is still great compared to most things on the market, but in my opinion has few advantages over either the Kindle Keyboard or current-gen Nook.

    I have no doubt at all that they will come back with something big, and I look forward to it. I’m pro-eReader. That generally means pro-Kindle and pro-Nook, since those are the names that drive the market. If either one became irrelevant it would slow improvement to a crawl. Choosing a side and excluding everybody else based on that choice would be counterproductive.

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