Neither party is saying much at this point. During a call with press and analysts about the formation of NewCo -- a jointly-owned subsidiary -- execs from the two companies danced around questions about the possibility of a Windows-powered e-reader, which could be branded as a Nook or in some other way.
There are clues that some kind of a dedicated, Windows-powered e-reader built by Microsoft and/or Barnes & Noble may be in the works. But it might not necessarily be a Windows 8 device.
One of my sources said that Microsoft and B&N had been working on a partnership for a while under which Microsoft would build an e-reader and B&N would build the back-end bookstore. According to that source, the partnership fizzled, perhaps due in part to the Microsoft Courier tablet effort (which also fizzled).
But the idea that there could be some kind of dedicated, Windows-powered e-reader didn't die. In fact, Microsoft execs have continued to tout the idea that an e-reader is part of the gamut of devices that will be powered by Windows. Just a month ago, in fact, Microsoft Chief Operating Officer Kevin Turner, mentioned again during a keynote that e-readers will be one of a handful of form factors where Microsoft's Metro interface/design style will play in the future.
"We have a myriad of form factors, price points, and capabilities, but we certainly see more form factors with Windows 8 coming forward," said Microsoft President Andy Lees, whom Microsoft officials are saying spearheaded the B&N partnership on Microsoft's side.
So is that a yes or a no? I have no idea. Barnes & Noble CEO William Lynch provided a bit more guidance, noting that there's a 1 GHz Texas Instruments chip powering Nook tablets today. "Microsoft has already stated its intention to run on ARM processors, including TI," Lynch said.
The version of Windows that is running on ARM is not, technically, Windows 8. It is known as Windows RT (and previously as Windows on ARM, or WOA). That version of Windows is built on the foundation of Windows (Windows core) and "has a very significant amount of shared code with Windows 8." But it's still not, technically, Windows 8. It's far more locked-down -- which might make it a better choice for a dedicated device, like an e-reader.
There's another option. Microsoft could license one of the embedded flavors of Windows -- like Windows Compact Embedded or Windows Embedded Standard -- to B&N to use as the operating system for a new e-reader. One of the advantages to B&N of this kind of an arrangement would be the company wouldn't have to pay Microsoft a penalty patent royalty payment for each reader sold. (That's what B&N now has to do with each Android-based Nook sold, as of the just-signed patent settlement with Microsoft.) The question is whether the cost to B&N of licensing some version of Windows for each e-reader is the same or less than the cost of using open-sourced Android (zero) plus some unpublicized patent-royalty payment to Microsoft.
Update: My ZDNet colleague Jason Perlow noted there's still yet another potentially possible option: Windows Phone OS 8, codenamed Apollo. Could Microsoft be offering Apollo for license to OEMs who are making devices other than phones? In the recent past, Microsoft has prohibited OEMs from using the Windows Phone OS on non-phone devices, limiting its licensing by screen size. But maybe...
There's one other point from the investor call is worth mentioning. Microsoft's Lees mentioned a few times that Microsoft is positioning Windows as key to the future of reading. He said that Microsoft doesn't see itself as "just" the platform provider; it intends to have a hand in how people are going to write/create stories, how they'll read, how they'll interact with stories, and how they'll learn -- a "blurring of different content types." B&N's role here will be to "help enable the purchase," Lees said.
(It's worth noting that the Microsoft-B&N deal isn't exclusive, so this doesn't mean Microsoft will be working only with B&N on the back-end store side. There's already an Amazon Kindle app for Windows 8.)
We haven't seen or heard much from Microsoft on the content creation/publishing side of e-books, at least so far. Are the Softies thinking about doing something along the lines of Jackson Fish Market, created by a few ex-Microsoft folks, by the way, which has been doing some pioneering work around an app that lets users record stories with audio and video and make them available online?
Whatever the likely Windows-powered reader ends up being, there's a good chance it might do more than allow users to purchase and read e-books. The lines are blurring in this space, with e-readers allowing users to run apps on their reader devices, making them more like specialty tablets.
"The wildcard is that Amazon has entered the tablet space in a big way," with the Kindle Fire, said one of my contacts, who requested anonymity. "Microsoft now classifies them as a competitor, and you can see an impact already. The Microsoft Stores originally carried the Kindle, but once the Fire was launched they removed the Kindle displays. So Microsoft now has a dependency on someone who is a competitor."
This story was originally posted at ZDNet's All About Microsoft blog.