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Microsoft buys N-trig's digital pen technology for Surface

The world's largest software company says it's acquired the Israeli company's technology assets.

The N-trig-made Surface 3 stylus is an integral piece of Microsoft's pitch for two-in-one tablets, which can be used for serious PC tasks and creative work. Sarah Tew/CNET

Microsoft on Friday said it has acquired the technology behind the digital stylus used in its Surface Pro 3 and Surface 3 tablets. The technology is made by Israeli company N-trig.

While terms of the deal weren't disclosed, the The Wall Street Journal reports Microsoft paid about $30 million for the technology. Microsoft owns around a 6 percent stake in N-trig; the two have been partners since 2008.

Microsoft's Surface tablet has become an important consumer business that now accounts for more than a $1 billion in quarterly sales. The company has not disclosed lifetime sales of any of its six Surface units to date, but revenue in the Surface division has been steadily on the rise since the introduction of last year's Surface Pro 3.

Microsoft markets that device and its cheaper sibling, the recently released Surface 3, as true two-and-one devices capable of creative work, like drawing with a stylus, as well as tasks suited to a PC. Microsoft also makes an 84-inch digital whiteboard for businesses, the Surface Hub, that, while not using N-trig technology, using a proprietary Microsoft stylus.

Founded in 1999, N-trig makes both digital pens and chips for touchscreens. It employs about 150 people, has more than 100 patents and has worked with other hardware makers including Lenovo and Sony.

In February, Israeli financial websites Calcalist and Globes said N-trig was in talks with Microsoft to be acquired for as much as $200 million, and Microsoft appears not to have followed through with a full-on acquisition.

The Israeli company was valued at $75 million in February 2014 and the company's revenue totaled $20.6 million in the first half of that year, when it sold 1.3 million digital pens, though it posted a loss of $5.1 million, according to Reuters.

Correction at 11:45 a.m. PT, Saturday, May 2: A previous version of this story said Microsoft's Surface Hub uses a N-trig-made stylus. That is incorrect; Microsoft makes it own stylus for the Surface Hub.