Xiaomi acquires 1500 patents from Microsoft, preparing to sell in U.S.

Xiaomi is reportedly signing a contract with Microsoft to acquire 1500 patents on June 1.

The time Microsoft and Xiaomi made this deal is when Microsoft CEO Sata Nadella visited Beijing. Microsoft spokesman claims Nadella’s visit to China’s capital Bei Jing is a part of his journey of Asia Developers Meeting.

Xiaomi’s deal with Microsoft suggests Xiaomi is working hard to master the patents in need so that it can sell its products outside developing countries. One important market to Xiaomi is U.S. Microsoft, on the other hand, is also working hard to charge Android device makers for patents, as Microsoft claimed Android OS has adopted a portion of Microsoft patents.

Except the cross lisence and patent transfer in the deal, Xiaomi and Microsoft together announce on Wednesday extending global partnership. As return to Microsoft in exchange, Xiaomi will preinstall Microsoft Office and Skype etc on Xiaomi tablet MiPad and smartphones. By the way, Microsoft is now having a case of antitrust in China due to software bundles. Microsoft spokesman rejected to discose if Nadella would meet any officer of China supervision department in Beijing.

Why Xiaomi has to acquire the patents to sell outside developing countries?

After 5 year fast growth, Xiaomi had became the largest smartphone maker in 2014 in China, but since 2015 Xiaomi’s income has staggering because China’s smartphone market is full of competition and the supervision in oversea markets is quite stricter. So Xiaomi starts to invest more funds in patents, offline stores and ads.

One example is this. Xiaomi Global VP Hugo Barra said in an interview on Thuesday that Xiaomi has just stopped selling in Brazil and the international marketing team has been retreated to Beijing thanks to Brazil policy not being clear.

Why Xiaomi chooses to acquire Microsoft patents?

Xiaomi Strategical Partner VP Xiang Wang claims,”Xiaomi and Microsoft both respect intellectual properties. We think our cooperation and commitment to long term investment in IP will enable Xiaomi to build a very powerful patented product line.” But Xiang Wang didn’t disclose how much Xiaomi paid Microsoft.

On the other hand, Jennifer Crider,spokesman of Microsoft laws department, claims that Microsoft has over 60,000 patents, and the portion sold to Xiaomi is just a minority. She says Microsoft will sell portions of patents periodically. Those patents sold to Xiaomi are some related to wireless telecommunications etc.

When Xiaomi will start selling in U.S.?

Huga Barra says Xiaomi hasn’t made a timeline to sell smartphones in U.S. Xiaomi started selling some products in U.S. already, incuding Android TV Box etc, but excluding smartphones. The market analytics thinks Xiaomi has to acquire more patents and get permit from U.S. Supervision Department in order to sell smartphones. Barra further says,” We are working through an official routine to sell smartphones in U.S. But now is not the right time heading to U.S, our focus for now is India.”

Xiaomi entered India with smartphones last year. Yet India market is way to small now. IDC’s stats shows Xiaomi hasn’t been one of the top 5 smartphone makers in India.