Barnes & Noble and Microsoft on Monday reached a settlement agreement regarding their Google Android patent dispute.
Brought forth by union executives the settlement includes a new e-reading partnership known as Newco which will see Microsoft grab a 17.6 percent stake in a project that will feature work from Barnes & Noble’s Nook business and its college division. In exchange for that funding Barnes & Noble will create a Nook app for Windows 8 that will help sell textbooks on future Microsoft-powered tablets which should start reaching market by last 2012.
Under the deal all legal action between the two company’s will halt however B&N and Newco will still pay royalties for the Android-based Nook lineup. While royalty payment are not known at this time B&N is likely happy to see the unblocking of future Nook features in which Microsoft was originally asking for a $15 to $30 cut for every Nook sold.
Barnes & Noble did state that it is still exploring a split between its digital and paper business and that the company’s final decision could break Newco off into a separate project however no specifics regarding that decision have been made at this time.
In the meantime analysts are not sure what prompted Barnes & Noble to reach settlement terms, however it was likely the large royalty fee Microsoft charges companies that don’t use its patent protect software. The only other alternative would have been for B&N to write its own original Android based e-book reader.
In the meantime the settlement gives Microsoft the leverage it needs through a big partnership to offer Windows 8-based tablets to classrooms, a main focus of the company’s upcoming initiatives.
The settlement isn’t just good for Microsoft, by partnering with the tech giant Barnes & Noble will open up its business to a more broad international market that the company has not yet been able to penetrate.