There are certain brick and mortar outlets that simply refuse to go down without a fight. Barnes & Noble is one of them and they are partnering with a powerful force to help them make up ground with their Nook eBook reader: Microsoft.

As subsidiary that is currently unnamed will see and investment of $300 million coming from Microsoft to help eBook and educational book sales. In return, Microsoft receives 17.6% equity, valuing the company at $1.7 billion.

For B&N, it’s an opportunity to have some flexibility from a business perspective. If they choose to spin the company off entirely, it will represent an out if the trends continue to pull people away from paper and towards the eBook revolution, particularly at the college level. For Microsoft, it puts more books on their platform and allows them a venue through which to directly compete with Apple and Amazon.

The Nook will soon have an application of its own on the Windows 8 platform, giving them more skin in the game against Apple on those terms as well.