It’s time for me to gloat. This lowly blogger, sitting on the “high perch” of his blog, once suggested to Microsoft that they buy Barnes & Nobles, specifically, for its ereader and ebooks business. Here were the 3 reasons cited 11 months ago.

1. Barnes & Noble has over 700 stores worldwide and over 600 college bookstores. These books stores are a great showroom for Microsoft’s array of software, gaming & partner made hardware products. Some of these stores may not be ideally located for Microsoft’s store strategy, and in those cases, Microsoft should just sell the location. Large stores, especially in upscale downtown locations or inside major shopping malls should be attractive to Microsoft.

2. Barnes & Noble, just yesterday, announced the new Nook ebook reader. As stated earlier, it is very promising new product. Even the “older” color screen version of the nook has been a hit product. Granted, the color nook runs Android. It’ll not be hard for Microsoft ride the success of nook while preparing to transition the product to something that runs a version of Windows CE kernel.

3. Barnes & Noble sells traditional paper books and, increasingly, the electronic version. Microsoft as a technology company is investing heavily in its online division to compete with Google. This is another way for Microsoft to ensure that they make their presence felt not just in search and related services, but creating valuable information content in its cloud services.

Microsoft did even better than what I had in mind – they just took a stake in the ‘E’ side of B&N’s business without taking over the high overhead paper, brick & mortar operations. This is typically the way Microsoft rolls when it needs to compete with “established” players in a sector, they identify a beaten down yet capable player, and partner with them. They have done it with both Yahoo & Nokia, and now with B&N – WSJ reports:

Microsoft Corp. is making a $300 million investment in Barnes & NobleInc.’s Nook digital-book business and college-texts unit in a move that helps value the prized Nook business, the companies said.

Microsoft will have a 17.6% stake in a new subsidiary for the businesses in a transaction that values them at $1.7 billion, the companies said. That compares with Barnes & Noble’s current market capitalization of about $791 million and could fuel the argument of some analysts and investors that the digital business should be separated from the retail division.

As part of the move, there will be a Nook application included in the new Windows 8, which is scheduled to have a release preview in early June. Later this year, computers and tablets with Microsoft’s Windows 8 operating system are expected to go on sale.

This is an excellent move on the part of Microsoft. I would have hoped that they would take a controlling stake in the B&N unit.

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