Microsoft Corporation is selling about 1,500 of its patents to Xiaomi. The Chinese mobile maker is planning to make an entry into the U.S. market. Under a deal announced Wednesday, Xiaomi will install Microsoft Office and Skype on its Android smartphones and tablets. Analysts believe that the deal will support Xiaomi’s global expansion plans.
Microsoft said in a statement that its partnership with Xiaomi will provide innovative user experiences on mobile devices. The availability of Microsoft Office on Xiaomi’s devices will allow tens of millions of consumers and business customers in China, India and around the world to work, collaborate and communicate in new ways, according to the company.
From September, Xiaomi will start shipping Android devices, including Mi 5, Mi Max, Mi 4s, Redmi Note 3 and Redmi 3, with Microsoft Word, Excel, PowerPoint, Outlook and Skype applications. Specific offerings may vary by device, market and mobile operator, according to the company.
“People want their favorite apps and experiences to work seamlessly on the device of their choice, and that’s exactly what this partnership offers,” said Peggy Johnson, executive vice president of business development at Microsoft. “Together with Xiaomi, we’re bringing the very best in mobile productivity to millions more customers in China and around the world.”
Xiaomi Eyeing International Expansion
Xiaomi was founded in 2010 by Lei Jun. The company sold more than 70 million devices in 2015 in markets including Taiwan, Hong Kong, Singapore, Malaysia, Philippines, India, Indonesia and Brazil.
Back at home, Xiaomi is facing tough competition from Huawei and Samsung Electronics, as well as small companies including Oppo and Vivo. The company’s phone shipments fell 9% year-on-year in China in the first quarter, Reuters reported, citing Strategy Analytics. The mobile marker’s market share dipped to 12% from 13%.
“This deal might just give them enough of a patent trove to move to Western markets,” said Sameer Singh, a UK-based analyst. “Their position in China has been under constant attack from even lower-end Android vendors, so moving overseas is now a necessity.”
Wang Xiang, senior vice president at Xiaomi, told Reuters that the acquisition of Microsoft Corporation patents was “an important step forwards to support our expansion internationally.” The deal includes voice communications, multimedia and cloud computing. Xiaomi filed some 3,700 patents in 2015.
Earlier this month, Xiaomi revealed a TV set-top box for the U.S. market. The Chinese company developed this product in cooperation with Alphabet Inc’s Google, which owns the Android operating system. Additionally, the company launched a tablet running a version of Microsoft’s Windows operating system.
Microsoft Windows Phones and Chinese Brands
A report by Gartner showed that worldwide smartphone sales increased by nearly 4% during the first quarter of 2016, but the market share of Microsoft Windows Phone dropped below 1%. The research firm estimates that nearly 2.4 million Windows Phones were sold during January-March period, around 0.7% market share overall. This is a massive decrease from the 2.5% market share in the same period last year.
Anshul Gupta, research director at Gartner said that “Chinese brands are emerging as the new top global brands. Two Chinese brands ranked within the top five worldwide smartphone vendors in the first quarter of 2015, and represented 11 percent of the market. In the first quarter of 2016, there were three Chinese brands – Huawei, Oppo and Xiaomi – and they achieved 17 percent of the market.”
Last month, Microsoft announced that it is selling its entry-level feature phone assets to FIH Mobile and Finland-based HMD Global Oy for $350 million. The deal will allow Nokia to return back to the mobile phone and tablet markets. The transaction is expected to close in the second half of 2016.
Shares of Microsoft Corporation were up 1.30% in after-hour trading. The stock has lost 5.88% year-to-date.