By Jason Perlow | April 30, 2012, 2:23pm PDT Summary: The resolution of the litigation between Barnes & Noble and Microsoft has resulted in a $300M partnership. Will it produce an entirely new class of mobile Windows device? The big news today is that Microsoft and Barnes & Noble have buried their respective litigious hatchets and as a result, Microsoft is going to invest in a $300M spin-off of B&N which is to include their NOOK products division as well as the companys higher education business. Also Read: Microsoft & Barnes and Noble settle patent dispute; create new subsidiary Is there a Windows-based Barnes & Noble reader in the works? Part of the nature of this spin-off, currently called NewCo is to produce an e-reader application written for the Windows 8 Metro interface, which will be used on new tablets and PCs running on the x86 and ARM architectures. But what about e-reader and Nook Tablet devices themselves, running on a Metro-enabled version of Windows? Back in November I speculated about the possibility of 7″, $199.00 tablets running the Windows Phone OS to compete with Amazons Kindle Fire. Also Read: Microsoft, Wheres your $199 Windows Tablet? At the time, I felt that Microsoft had missed a huge opportunity in the 7″ form factor, since they had an OS for the ARM architecture pretty much ready to go, with a app ecosystem developing for it well underway. However, Microsoft along with this new joint venture with Barnes & Noble could very well make a run for Amazons low-end tablet aspirations. The question remains, however, if the price points could be kept agressive to compete realistically with Kindle Fire, if Microsoft and B&N can present a value-add that is comparable to what Amazon brings to the table with Prime, and if a sufficient amount of exploitive apps for Metro using a 7″ form factor and corresponding screen resolution could be built quickly enough. One of the reasons why NOOKTablet could remain relatively competitive with Kindle Fire was its use of the Android operating system, which did not require licensing. If the next-generation product is to be based on some version of Metro-enabled Windows, there is the issue of additional licensing cost for the OS that has to be built into the bill of materials for each device. However, as Microsoft will be a partner in this new NOOK joint venture, one would presume that these licensing terms might be more generous than what the average Windows Phone or Windows 8 OEM is going to receive. Beyond the licensing there is of course the adaptation and software fragmentation issues that currently plague Android that Windows 7 Phone OS is currently immune to. If a 7″ form factor device is to be built, and it ends up running the next generation of Windows Phone OS (codenamed Apollo) then it would have to support a higher screen resolution. One of the reasons why Windows Phone 7 was never licensed to OEMs for anything other than producing smartphones was that they only supported a single screen resolution. Back in February, my colleague, Mary Jo Foley, published a list of possible features that Apollo might support, based on information leaked from various sources on the Internet. Also Read: Windows Phone 8, Whats on the feature list The first five features, namely support for multiple processors, support for multiple screen resolutions, removable MicroSD card support, and inclusion of the Windows Core elements would seem to be essential for building a 7″ tablet device. While it has been widely reported that the first Apollo phones will be out in Q4 2012, we dont know if all of these features are actually going to appear in the finished OS. The other possibility is to build the device on Windows RT, the ARM-based OS derivative of the full-blown Windows 8, formerly referred to as Windows on ARM.