Microsoft and Xiaomi “expanded their global partnership to provide innovative user experiences on mobile devices”, as it was reported that the smartphone maker was facing hurdles in its overseas expansion.
Microsoft is set to transfer a number of patents to Xiaomi (reportedly 1,500), and the China-based device maker will install Microsoft’s Office on “a number of smartphones and tablets”.
“As a result, tens of millions of consumers and business customers in China, India and around the world will have new ways to work, collaborate and communicate,” Microsoft said in a statement.
Due to its relatively new entry to the market, Xiaomi’s intellectual property position has often been called into the spotlight. While numerous patent battles between top-tier vendors have not really led to decisive victories, this has been where both companies have large patent armouries with which to assert – and defend – themselves.
While it is not clear what the patents involved in the transaction cover, with Microsoft largely exiting the mobile market it is certainly possible it has a number of relevant, but unwanted, intellectual property holdings it would be prepared to trade.
It has been suggested that this could be a precursor to Xiaomi moving into “western” markets such as Europe and US, although the company seems to have enough on its plate with the countries it operates in already. And while the company’s fast growth saw it become the darling of the market, it is unclear how it would fare in a battle with deep-pocketed rivals in their established markets.
On the flip side, the deal gives Microsoft a way to reach new customers in two potentially lucrative markets – India and China. While it has been suggested that Office is widely pirated in many emerging markets, it will now provide customers with an easy, official route to the suite, hopefully enabling it to generate more sales further down the road.
Beginning from September 2016, Microsoft apps will be preinstalled on devices including Mi 5, Mi Max, Mi 4s, Redmi Note 3 and Redmi 3, although “specific offerings may vary by device, market and mobile operator”.
Microsoft and Xiaomi have already partnered for a Windows 10 version of Mi Pad, and Microsoft’s Azure powers the Mi Cloud service.
According to various reports, Xiaomi has scaled-back its operations in Brazil, having made its debut in the country last year.
AndroidPIT Brazil reported that Hugo Barra, Xiaomi’s international head, said: “”Because of the constant evolution of the rules of production and taxation for online sales in Brazil, we decided not to host new product launches in the country in the short term. We know the expectations of the fans about new products, but we decided that, given the current situation, it was the best decision.”
As part of this, the company will also only sell smartphones through partners, and not via its own direct-to-consumer channel. Marketing and social activities are also being shifted to Beijing, which Barra span as the market “gaining more relevance” at headquarters. And a manufacturing partnership with Foxconn also appears to have run its course.
With Xiaomi’s home market of China reaching maturity, and its other key market – India – seeing challenges, the company’s previous fast growth is clearly a thing of the past.