Xiaomi Corp, the Chinese smartphone manufacturing company, has decided to buy 1,500 patents from Microsoft Corp. as the company faces a rise in costs as it continually expands outside of China.
The new deal shows the company’s intent to one day sell their devices in some of the developing countries, as it now possesses the intellectual property needed to do so. It also shows that some of the company’s goals have always been to sell their phones in the US. Microsoft will also see their technology finally get some royalty after being involved in fights with the Android operating system as they claim, the technology uses some of its patents.
Microsoft has been facing some antitrust investigations over allegations that they bundled some of their software. The deal comes at a time, Microsoft’s CEO, Satya Nadella is beginning a visit to the Chinese capital as he plans to meet up with developers and partners across the Asian continent. A company spokesman, however, declined to comment on whether he would meet up with Chinese regulators during his visit so they could talk about the investigation.
Xiaomi, a Beijing-based smartphone startup is one of the most used smartphones in China, after shooting straight to the top back in 2014. The company kept their coats down, but as they now look to expand across the Chinese border, they have had to spend to get some patents which they can then use in the countries outside of China. The costs do not come at the best time however as the company’s revenue growth has been slow as the market in China has become saturated.
The company also stopped new products launch in Brazil after facing uncertainty in the government policy. The Vice President of International, Hugo Barra said the company was going to bring back their international teams back to China. The patents from Microsoft will be bought for an undisclosed sum.
The company will also sign a cross-licensing agreement with Microsoft, which mirrors those that were struck a year earlier by Dell and Samsung. As part of their agreements, Xiaomi will preinstall the Ms. Word application together with the Microsoft-owned video chat application, Skype, on all of their devices. Some of the devices which will have these new apps include Mi 5, Mi Max, Redmi Note 3 and the Mi 4S.
The Senior Vice President of strategic cooperation at Xiaomi, Wang Xiang said that both Xiaomi and Microsoft had a huge respect towards the intellectual property rights. He also said that his company believed that through this cooperation they would build an unyielding patent portfolio.
Microsoft as a company has around 60,000 patents in its hands. This means that the ones sold to Xiaomi are nothing but a few and a small share. Microsoft Corporate Vice President, Jonathan Tinter, said that the licensing agreement they had struck with Xiaomi was broader and wider than most of the partnerships they had struck with other companies.