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Microsoft Nook Bid Raises Questions About B&N

Reports that Microsoft is offering Barnes & Noble $1 billion for its Nook ebook business raises questions about the fate of the only remaining national chain bookseller and about  the future of digital book selling.

Since TechCrunch broke the story last week, citing leaked internal documents, pundits have widely speculated that Microsoft is interested in acquiring Nook content, but will kill the device business. The demise of the Nook e-readers and tablets had been forecast for months prior to TechCrunch’s story, given sluggish sales in the 2012 holiday season and the fact that B&N continues to lose money on it’s Nook segment.

The Nook’s decline is disappointing for anyone interested in a competitive ebook market, as B&N once seemed poised to challenge the dominance of Amazon’s Kindle business.

As we wrote here in early 2012:

Barnes & Noble, led by William Lynch, has exceeded all expectations in the past two years with its launch of the Nook. B&N’s 300-member Silicon Valley office, after giving Amazon’s Kindle developers a two-year head start, beat Amazon to the tablet market by fully twelve months, and introduced what’s generally seen as the state-of-the-art e-ink reader, the Nook Simple Touch, eight months ago.

Even as the Nook fell short of its promise, it was the Kindle’s closest (albeit not very close) rival, according to Bowker research reported last week by Publishers Weekly.

The Kindle family, by a wide margin, was also the most popular group of devices used by e-book buyers to download e-books in 2012, with 55% of the e-book buyers using either the e-ink or tablet versions. The Nook, which held second place, was used by 14%. Tablets, including iPads, came in third at 13%.

As for what a Nook sale would mean for B&N’s bricks and mortar business, one Forbes writer wondered whether the retailer could be heading the way of Borders.

Premature? Of course. But still a chilling thought.