Xiaomi gunning for Western market with new patent deal

Thomas Wellburn
June 1, 2016

Xiaomi and Microsoft have both reached a deal that will see phones including the Mi 5 and Mi Max ship with the Microsoft app suite.

Reuters reports that Microsoft will transfer some 1,500 patents directly to Xiaomi, in an effort to boost their own market share in developing markets such as China and India. The deal seems to be mutually beneficial, since Xiaomi is also looking to capitalise on the western market. According to Q2 results from last year courtesy of the International Data Corporation, Xiaomi still only commands roughly 6% of the overall world market, with the majority of their footprint in China and the Asia regions.

It’s no secret that Microsoft makes quite a nice share of money from Android due to their large patent library, of which other manufacturers need to pay royalties for using. In an effort to improve their own footprint within the Google OS, Microsoft has recently been cutting these fees if manufacturers agree to install the Microsoft app suite on their handsets. Xiaomi appears to be yet another manufacturer who has agreed to these terms, joining other big players such as Samsung and Sony.

Tristan Sherliker, associate solicitor for the EIP and specialising in Patents and Trademarks, didn’t seem surprised by the deal. “The Western market is clearly important to Xiaomi. It’s already a major player in the smartphone industry, but we don’t see much of it in the West.”

“As a relatively new entrant to the market, Xiaomi doesn’t have the same long history of development and patent filing as others in the market, meaning that almost all of its licence fees flow outwards.”

For Xiaomi especially, the majority of their patents are based in Asia, without much of a governing footprint in the west. There is no “international patent” that will protect an invention all over the world, so it’s a smart business move to jump on the opportunity and get a better foothold on our shores.

With Microsoft recently selling their feature-phone business and downsizing their smartphone division by some 1,850 jobs, there’s no doubt that this will also help with their own shift to services rather than hardware.

We can’t imagine Google will be particularly happy with Microsoft pushing their own services ahead of those developed by the search giant, but there’s little the company can do to stop these pre-installed apps.

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