A new partnership between Microsoft and Barnes & Noble (B&N) will expand the Barnes & Noble digital bookstore and make it the world’s largest digital catalogues of e-Books, magazines and newspapers. The project, titled Newco, features a Nook application for Windows 8, and is leveraged heavily on B&N’s Business and College entities.

The idea is to provide a new digital platform for educators and students where they can consume, create and share knowledge. Newco is an opportunity for both companies to explore innovative device options and to reach a broader market with all of their products.

William Lynch, CEO of Barnes & Noble comments on the partnership:

“The formation of Newco and our relationship with Microsoft are important parts of our strategy to capitalize on the rapid growth of the NOOK business, and to solidify our position as a leader in the exploding market for digital content in the consumer and education segments,”

“Microsoft’s investment in Newco, and our exciting collaboration to bring world-class digital reading technologies and content to the Windows platform and its hundreds of millions of users, will allow us to significantly expand the business.”

Andy Lees, President at Microsoft also comments on the new partnership:

“The shift to digital is putting the world’s libraries and newsstands in the palm of every person’s hand, and is the beginning of a journey that will impact how people read, interact with, and enjoy new forms of content,”

“Our complementary assets will accelerate e-reading innovation across a broad range of Windows devices, enabling people to not just read stories, but to be part of them. We’re at the cusp of a revolution in reading.”

Microsoft will be making a $300 million investment in the venture, which will give them about an 18% stake. B&N will own the remaining 82% and be the main contributor via its already established college and business entities and digital bookstore.

B&N has been planning to separate their digital business form other products to maximize profits for shareholders since last year, but the particulars of what will become of Newco are not yet known. We’ll be watching this partnership very closely and as new details become available, you can read about them here.