Chinese smartphone maker Xiaomi Inc and global software giant Microsoft Corp announced a cooperation deal Wednesday under which Xiaomi will install copies of Microsoft software on its phones and tablets.
The two will also cooperate on patents in an arrangement that analysts said may be a win-win situation for both companies, allowing them to offset weaknesses in their respective positions.
Starting in September, Xiaomi will preinstall Microsoft's Office software and online video software Skype in the Android-based operating system in a series of smartphone and tablets that include the Mi 5, Mi 4S and low-end Redmi 3, according to a statement Xiaomi e-mailed to the Global Times Wednesday.
Microsoft Corp is selling license about 1,500 of its patents to Xiaomi under a cross-licensing arrangement, a Reuters report said on Wednesday.
Analysts said the deal may help Xiaomi realize its ambition of being a major player outside China, compensate for its weakness in patent protection and mitigate legal risks.
Zheng Chunhui, an industry analyst with Beijing-based market consultancy Sootoo, told the Global Times Wednesday the deal will help Xiaomi go abroad by reinforcing its brand.
"Xiaomi is an Internet-based firm and its products are outsourced, making it weak in patents. This cooperation with Microsoft will pave its way to expand overseas," Zhang said, comparing the deal to Chinese IT giant Lenovo's $2.91 billion acquisition of handset brand Motorola in 2014. That deal was also motivated by a quest for patents.
Despite efforts to expand globally, primarily in India and Brazil, Xiaomi is heavily dependent on its home market for growth with about 90 percent of sales in 2015 generated in the domestic market, market research firm International Data Corp (IDC) said in a report in January.
Xiaomi is also making forays into more mid-range models, the IDC report noted, although most of its shipments are still the low-end Redmi line.
Zheng said the cooperation with Microsoft could pave the way for some mid-range product entry into markets in developed countries and regions and "a launch in Europe is likely."
As for Microsoft, experts said that Xiaomi - as the top phone vendor in China with sales of 64.9 million smartphones in 2015 - could help the U.S. company boost its presence in the mobile segment with the installation of its software.
