Microsoft has bought a chunk of Barnes & Noble's Nook business:

Barnes & Noble and Microsoft have formed a partnership in a new B&N subsidiary—temporarily called Newco—that consists of B&N's digital business and B&N College. Microsoft is making a $300 million investment in Newco for a 17.6% equity stake; B&N will own the other 82.4% of the company. The deal values the new company at $1.7 billion.

Wall Street is liking the news: in pre-market trading, B&N stock is up 77.6%, to $24.29 a share.

The Nook Color and Nook Tablet are two of the only tablet computers (besides the iPad and the Kindle Fire) to show any amount of real success in the general interest market. (And the Nook Simple Touch is the best e-ink e-reader on the market, period.) It's smart of Microsoft to buy in. Of course, this kind of sets Microsoft up as an Amazon competitor, which is especially interesting; we have the makings of a cross-town tablet war.