Monday, April 30, 2012

Microsoft Returns to the eBook Business

In mid-August of last year Microsoft announced that it would be pulling the plug on its eleven year old Reader software and the .lit format it supported. No official reason was given, and the company stated unequivocally that they would not produce a new e-Reader software or even help their customers migrate their .lit files to another ebook platform. They would continue to provide downloads of the Reader software for a year - until August 30th of this year - but after that you're on your own. The online Reader store closed up in mid-November, and it looked to be the end of ebooks for Microsoft.

I had been a fan of Reader and the .lit format almost since its inception back in August of 2000: ClearType was a huge improvement over the basic text files I'd been gleaning from Project Gutenberg, making the text crisp and clear on the tiny iPaq Pocket PC that I had bought on its release that April and had carried with me ever since. The device's 32 Mb of onboard storage, augmented by an additional 128 Mb SD card, meant that I could carry dozens - if not hundreds - of ebooks with me wherever I went! Between the two my reading intake increased ten-fold. In addition, the ability to highlight passages and insert notes or scribble doodles with the stylus, as well as searching through the document, was a quantum leap in reading. For me, the digital revolution began way back there with the new millennium, and I haven't looked back since.

More importantly, the Reader add-on for Word allowed me to create .lit ebooks instantly from any document, and Gutenberg soon began doing so themselves. This meant that I would never run out of content to read, so long as the software was supported.

So it was with great sadness, and some bitter disappointment, that I bid farewell to Reader. My iPaq had long since given up the ghost, and a newer version purchased after HP's acquisition of Compaq was soon replaced by a new kid on the block: a first generation Kindle. Things would never be the same, and Microsoft new it.

In retrospect, it's one of the more curious business decisions of that first decade of the 21st century that Microsoft chose not to press its advantage in the ebook space by producing a hardware device of its own to support that pioneering digital format. But Microsoft have always been a software company rather than a hardware manufacturer, and perhaps they didn't see a future in competing with a retail giant like Amazon in that arena. Or maybe they just misjudged the impact the Kindle would have on the world of publishing. They had, after all, seen a hundred other ebook formats come and go with little or no impact on the reading world. For all its advances, their own format had barely left an impression on the general book-buying public, and the ebook market was essentially non-existent, so one can hardly blame them.

So not surprisingly, it was with much interest that I read the press release this morning announcing that Microsoft had partnered with Barnes & Noble to create a new subsidiary company that will house B&N's digital content, including the Nook devices and app software, as well as their educational division. Microsoft will infuse $300 million into the venture (currently dubbed "Newco") for a 17.6% stake in equity, and bundle the Nook app in its upcoming Windows 8 OS. At one fell swoop this lifts B&N's digital outlook from troubled waters to fast track for global domination, while virtually dooming its brick and mortar stores to second-rate obscurity in a heartbeat.

According to the press release, the intention of the new partnership is to "accelerate the transition to e-reading." "We're on the cusp of a revolution in reading," it says. What this tells me is that the captain is jumping from a sinking ship in shark infested waters to firmer ground aboard an ocean liner bound for the tropics. While Barnes & Noble's announcement states that Newco "will have an ongoing relationship with the company's retail stores," it goes on to say that "The company intends to explore all alternatives for how a strategic separation of Newco may occur." B&N had announced back in January that it was exploring just such a "strategic separation" of the digital side of the business from the physical, and we have now seen the means by which this will occur: Newco will thrive, Barnes & Noble will not.

Partnering with Microsoft does a number of important things beyond the obvious monetary clout it brings. It gives them a global platform in the form of Windows, allowing Nook to piggyback on Microsoft's extensive reach: with the release of Windows 8 later this year Barnes & Noble will go from virtually no international presence whatsoever for its ebook format to near absolute saturation overnight. Expect to see a massive winding up of its online presence in the meantime, if not an all-new web store for "Newco". Secondly, this makes absolutely clear BN's intentions with regards to divesting its digital revenue from the shackles of the brick and mortar store. Nook "boutiques" are likely to remain in place so long as there's a place for them to remain, but henceforth they'll reside in rented space that they can easily move elsewhere should such a move prove beneficial. My guess is Nook boutiques will start to spring up in mall kiosks and stand-alone outlets as print books disappear.

Most importantly, however, is the reinforcement this brings to the digital consumer. I have personally avoided buying Nook ebooks for the very reason my .lit experience dictates: with Barnes & Noble teetering on the brink of financial oblivion, why in my right mind would I invest in a library of content that may or may not be supported just a few years down the road? After the demise of Borders last year the stability of Barnes & Noble came far more into question, whereas the chances of Amazon or Apple going by the wayside anytime soon don't appear too probable.

And while I can convert my .lit archive to other formats via software such as Calibre, the conversion isn't perfect and it's a lot of time and trouble I just as soon avoid. So the support of Microsoft goes a long way to assuaging my anxiety with regards to the Nook platform. The physical stores my go away, but for now at least, it looks as if the Nook is here to stay. And it will probably be running a Windows Mobile OS next year.