Nook Media has some seed money behind it and hundreds of millions of mutual Barnes & Noble and Microsoft customers to target, among others. Microsoft invested $300 million into Nook Media at a post-money valuation of $1.7 billion. That gives Redmond about a 17.6 percent equity stake. Barnes & Noble owns the remaining shares.

"As demand for digital content continues to increase, we are focused on bringing ground-breaking reading and learning content and technologies to more people in more formats than ever before, including the imminent launch of our exceptional Nook reading application for Windows 8," said William Lynch, CEO of Barnes & Noble.

Lynch said Barnes & Noble would add value to the Windows 8 platform by "bringing great reading experiences and one of the world's preeminent digital bookstores to millions of Windows 8 users." Barnes & Noble is folding its college and digital businesses into the new venture.

A $300 million investment is not much for Microsoft, but it does show that the software giant is serious about digital reading -- and serious about building out a content ecosystem in line with its Windows 8 platform.

"Nook Media is a leader in developing the next generation of digital reading and we look forward to the company bringing one of the world's largest digital libraries to Windows 8 devices via their upcoming Windows 8 app," said Andy Lees, president at Microsoft. Lees also pointed to Nook Media's product roadmap and expansion into markets around the world, including the United Kingdom.

A Shot in the Arm

Avi Greengart, an analyst at Current Analysis, told us the Microsoft investment will be a shot in the arm for Barnes & Noble -- a shot in the arm that gives the book retailer some hope of having the capital it needs to compete.

"We saw last year that Barnes & Noble came out with two Nook tablets priced above Amazon 's Kindle Fire. While it was still a success for Barnes & Noble, from a competitive standpoint it was a no-no," Greengart said. "They've rectified that this year going into the holiday season with the Nook HD and the Nook HD+ priced below the equivalent Amazon Fire products, and in general, better specs."

Long-term, Greengart said it remains to be seen how the partnership will evolve. So far, the only big announcement is a Windows 8 app, he said, and Microsoft doesn't necessarily need to pay $300 million to get a Windows 8 app on the platform.

"I don't know if we are going to see new Nook models based on Windows or the next version of the Nook tablets based on Windows, but that would certainly be the implication here," Greengart said. "That would be a major shift in direction for Barnes & Noble."