There’s already a Nook application for Windows PCs, but none for Windows phones.

William Lynch, the CEO of Barnes & Noble, said Nook software will continue to be available on devices like the iPhone that compete with Windows Phone.

He declined to say whether it was Barnes & Noble or Microsoft that initiated the discussions, but he said the talks had been going on since before the beginning of the year.

“We have been circling the relationship for quite a long time,” added Microsoft president Andy Lees. “When you think of different types of reading and what’s going to happen when that goes digital, it’s really quite dramatic to be bringing that to Windows customers.”

The Nook has pleasantly surprised publishers, who worry about Amazon’s domination of the eBook market. Unveiled to skeptical reviews in 2009, the Nook is estimated to account for about 25 percent of the U.S. eBook market. The Nook helped to cut Amazon’s share from what was believed to be 90 percent to around 60 to 65 percent. David Pogue in The New York Times called the initial device “an anesthetized slug,” but praised the new Nook Simple Touch as a “very big deal” that offers “spectacular, crisp pages to read in any light.”

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Barnes & Noble investors have also been concerned about the recent government lawsuit against Apple and some leading publishers over alleged price fixing. When Apple launched its iPad in 2010, Simon & Schuster, Penguin Group (USA), and other publishers switched to an “agency” model that allowed publishers to set prices for eBooks, a system many believe helped Barnes & Noble.

Amazon had been offering top-selling eBooks for $9.99, a cost publishers, agents, and writers believed was so low it could drive competitors out of business. Three of the five publishers sued—Simon & Schuster, HarperCollins, and the Hachette Book Group—have already agreed to settle, meaning prices for their eBooks likely again will drop on Amazon.

Microsoft has a long-standing interest in the eBook field. It launched eBook software in 2000, but was never able to build a substantial library of books. It’s discontinuing the software on Aug. 30.

Barnes & Noble, based in New York, currently runs 691 bookstores in 50 states. The companies said that the subsidiary will have an ongoing relationship with Barnes & Noble’s retail stores, but what that relationship will be is unclear.

“The whole reason the Nook business is expanding so rapidly is because bookstores are committed to it and know how to market the product in that environment,” said Michael Norris, an analyst at Simba information.

The possibility of a separation of Barnes & Noble’s digital and college businesses has been brewing.

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