Programmatic Lunch

Microsoft Sells 1,500 Patents to Xiaomi in "Long-term Partnership"

Tim Maytom

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Microsoft has revealed it is selling around 1,500 of its patents to Chinese smartphone manufacturer Xiaomi, in a move that beings what the two companies have said will be a long-term partnership.

The deal includes a patent cross-licensing arrangement between the two firms, and a commitment by Xiaomi to ship phones and tablets pre-installed with copies of Microsoft software including its Office suite and Skype.

The companies have not disclosed the financial terms of the deal, but both are likely to benefit from the partnership, with Microsoft expanding its presence in China and Xiaomi strengthening its patent protections which have hampered the company's attempts to expand beyond Asia.

"This is a very big collaboration agreement between the two companies," said Wang Xiang, senior vice president of Xiaomi, who also called the acquisition of patents "an important step forwards to support our expansion internationally."

While Xiaomi has boasted huge growth over the past few years, the company saw domestic shipments drop nine per cent year-on-year in Q1 2016, with its market share also falling by one per cent, as it was squeezed at the top end by Huawei and Samsung, and at the bottom by newcomers like Oppo and Vivo.

Meanwhile, Microsoft has a number of existing licensing and patent-sharing deals in place with Android device makers, but it has failed to make much progress with Chinese manufacturers, and is keen to tap into Xiaomi's audience of young, affluent Chinese users.

The agreement between the two companies comes just before Microsoft CEO Satya Nadella visits Beijing. The US company is still the subject of an antitrust investigation in China over the way its software was bundled, and its offices were raided by Chinese authorities in 2014.