Barnes & Noble Consolidating Nook R&D in Palo Alto

Barnes & Noble Touchscreen NOOK Wi-Fi eReaderBarnes & Noble will consolidate Silicon Valley teams developing its Nook e-reader  at Stanford Research Park in Palo Alto.

It’s signed a deal for more than 200,000 square feet of space for research and development, one of the largest leases of its kind signed during the first quarter, The Wall Street Journal reports. The move is expected to take place next year.

The has has about 400 employees in various offices in that city, but they won’t take up all the space – it will allow room to grow.

The company has more than 20,000 external developers signed up to work on the Nook. Content sales on the device grew by 65 percent in the company’s latest quarter.

B&N is focusing on digital as it narrows its losses. This week it reported a fourth-quarter loss of loss of $57.7 million, better than its year-earlier loss of $59.4 million. Nook sales dropped 10.5 percent in the quarter as the company took back old models in ahead of offering new ones. It reported Nook sales of $933 million for the full fiscal year, an increase of 34 percent over the previous year.

During the new fiscal year, Microsoft’s $605 million investment in the Nook and B&N’s college publishing business is expected to kick in. The software maker will get a 17.6 percent stake in the new subsidiary and a Nook application will be included in Windows 8, though the companies have been mum on whether that includes a Windows 8 phone app.

It’s not clear how that partnership will play out, since Microsoft also has a smartphone-ebook deal with Nokia. Despite rumors to the contrary, B&N was not involved in Microsoft’s announcement this week of the Surface tablet, which is considered a competitor to the Nook.

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