Image Credit: Jim Sulley/Newscast

Microsoft and Barnes & Noble are very much the e-book underdogs, as Amazon and Apple's iBooks store for the iPad dominate the market.   But today Barnes & Noble announced plans for an e-books venture, with Microsoft taking a $300 million investment for a 17.6 percent equity stake.

The as yet unnamed company will focus on the Nook e-reader, the e-book brand and the educational reading market. Microsoft and Barnes & Noble didn't share much on what this will mean for users, but they did announce that a Nook application for Windows 8 will be available.

Amazon already has a Windows 8 app. Windows 8 is expected to be released later this year, although Microsoft hasn't confirmed a date.

Microsoft and Barnes & Noble also said they'd settled an e-book patent dispute.  "Barnes & Noble and Newco [placeholder name for the new venture] will have a royalty-bearing license under Microsoft's patents for its Nook eReader and Tablet products. This paves the way for both companies to collaborate and reach a broader set of customers."

Barnes & Noble just released a new version of its Nook, the Nook Simple Touch with GlowLight.