Xiaomi buys Microsoft Smartphone Patents

Recently, Microsoft (NASDAQ: MSFT) has reached an agreement with Xiaomi to purchase roughly 1,500 patents from Microsoft, which the patent deal will move the companies a little closer together and contribute Xiaomi into a smoother path for expansion into the Western markets. This is known as “cross-licensing”, which means Xiaomi will use Microsoft apps on its Android phones; similarly, Microsoft will also benefit from Android apps, such as Office and Skype, which is pre-installed in Xiaomi’s smartphones. Wang Xiang, the senior vice president of Xiaomi, describes the deal as “a very big collaboration agreement between the two companies.”

“Both Xiaomi and Microsoft respect intellectual-property rights,” Mr. Wang said. “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.”

This deal also reflects Xiaomi’s efforts to acquire the intellectual property for its future overseas development. The Beijing-based company was ranked the top of China’s smartphone market in 2014. Xiaomi originally set itself a target of selling 100 million smartphones in 2015, but it managed to sell only 71 million, partly because of increased competition from domestic rivals.

“Xiaomi is under the restriction of foreign government policy. Xiaomi has temporarily halted the launch of new products in Brazil due to uncertainty in government policy,” said in an interview on Tuesday by Hugo Barra, Xiaomi’s Vice President of International. From this patent deal, Xiaomi will get the patent licensing which includes wireless communications and other technologies, such as video. They also have brought other products into the United States, including an Android TV set-top box. The company would likely need more patents and regulatory approval to sell smartphones in the U.S., according to analysts.

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