Microsoft has committed $300m to bookseller Barnes and Noble as part of a joint venture into the e-books market.
The company said that it would be backing the creation of a Barnes and Noble subsidiary focused on the e-books and education markets.
Currently referred to as "Newco," the firm will be owned in part by Microsoft and controlled by Barnes and Noble.
"The shift to digital is putting the world's libraries and newsstands in the palm of every person's hand, and is the beginning of a journey that will impact how people read, interact with, and enjoy new forms of content," said Microsoft president Andy Lees.
"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."
As part of the deal, Microsoft will be porting the Nook reader software to its Windows 8 platform.
While the two firms made no mention of plans to run Windows on the Nook tablet, Microsoft is developing a version of Windows 8 specifically designed for tablet systems.
The deal also brings an end to the two firms' patent infringement suit.
Microsoft's backing could breathe new life into a Nook platform which has been struggling to keep pace with the likes of Apple's iPad and Amazon's Kindle Fire in the tablet market.
Enderle Group principal analyst Rob Enderle told V3 that assuming Microsoft brings Windows 8 to the Nook line, the Newco venture could carve out a niche in the education market.
"Microsoft has a better relationship with education than either Amazon or Apple have and their offering is more secure which likely will make publishers and school administrators happier," Enderle said.
But Microsoft would have been mindful that Apple's profile in the education sector was rising sharply, said Enderle. The deal with Barnes and Noble may help cement Microsoft's position, he added.
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