Microsoft considers $1 billion Nook Media acquisition

Microsoft has reportedly offered $1 billion for the assets of Nook Media, its ebook and tablet joint venture with Barnes & Noble.

According to the terms of the deal, seen by TechCrunch, the firm would acquire its preferred assets from the digital operation, namely ebooks and the Nook hardware.

Microsoft already owns a 17.6% stake in Barnes & Noble’s Nook subsidiary after a $300 million investment in April last year. As part of the deal, Microsoft agreed to pay out an additional $305 million over the next five years in return for Nook content on Windows 8. The two companies also shared revenue from content and hardware sales.

Analysts suggested that Microsoft has gained little from the deal so far, and speculated the two companies could produce a Nook tablet running on Windows software. Currently the tablets run on Google’s Android and have just begun to include Google’s app store, Google Play.

But according to the documents, Nook Media is planning to axe its line of Android tablets entirely by the end of its 2014, phasing out hardware in favour of licensing content to third parties. Those third parties could mean Microsoft and its manufacturing partners, or competitors. Nook won’t actively phase out ebook readers, but the company expects sales to decline as consumers naturally trade up to tablets.

Barnes & Noble has sold ten million Nook devices to date, but reported the division “fell short of expectations” during its most recent quarterly earnings.