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Xiaomi Purchases 1,500 Patents from Microsoft; Looks to Expand in Developed Markets

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Software Patents

About 2 weeks back, a deal was made by Microsoft to sell its feature-phone business to FIH Mobile and HMD Global Oy. Microsoft’s mobile phone business hadn’t taken off as expected and it was necessary to get rid of the extra baggage.

In a latest development, Xiaomi has agreed to buy 1,500 patents from Microsoft as a part of a global partnership, which will allow the Chinese manufacturer to market its smartphones outside developing nations, currently dominated by Samsung and Apple. Both the companies declined to reveal the sum of money transacted between the two.

On the other hand, this gives Microsoft an automatic edge over other similar softwares, considering not many have access to Microsoft apps on Android smartphones. Now that Microsoft Lumia mobile phones are not being developed, it seems like the best path to increase penetration amongst Android users.

According to an article by WSJ, Wang Xiang – Senior VP at Xiaomi, said “Both Xiaomi and Microsoft respect intellectual-property rights. We believe that with this kind of collaboration and also our commitment for the long-term investment in IP, we are going to build a very strong patent portfolio.”

The report also states that Microsoft owns more than 60,000 patents, so selling 1,500 patents does not impact Microsoft’s operations, and at the same time will help it to grow through the partnership.

Xiaomi’s Strategy to buy Patents from Microsoft

Satya Nadella, CEO – Microsoft, is in Beijing this week and it was the best time for the largest Chinese smartphone manufacturer to strike a deal with the software giant.

Microsoft faces hurdles in China owing to bundling of softwares, for which it does not get any royalty. Xiaomi on the other hand reached its peak in 2015, after which the sales remained stagnant and there was not much scope of international launches.

Through this agreement, Xiaomi phones will come preloaded with Microsoft essentials like Office and Skype. Such phones have been targeted to be sold in the US and India. While US market remains a little dicey at the moment, Indian market is relatively attractive.

Hugo Barra, VP of International at Xiaomi, wants to focus on Indian market where the operations have not scaled up as expected. Domestic manufacturing is expected to clear the hurdles in India, and single brand retail shops to promote the products in the country.

Xiaomi is now going to focus on high-end smartphone over sales volumes, after a period of budget-friendly Android phones.

Source: WSJ

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