.@Xiaomi to buy 1,500 patents from @Microsoft as $MSFT embraces Asset-Lite business model like $GOOGL and @Android, $QCOM and $IDCC
The arrangement that has Xiaomi is buying 1,500 patents from Microsoft so it can bulk up its intellectual property vault to fend off attacks as it moves into other countries means more smartphone competition is on the way. The same transaction means after failing repeatedly to break into the smartphone market itself, Microsoft is embracing the Asset Lite business model by monetizing parts its patent library. As we’ve seen from Qualcomm and others, margins on royalties tend to be sky high.
The transaction addresses a key weakness facing Xiaomi, which is seeking to sell its devices in countries outside its home market but has been hindered by its relative lack of intellectual property to fend off lawsuits.
The deal reflects Xiaomi’s efforts to acquire the intellectual property it needs to one day sell its devices beyond developing markets. One of its ultimate goals is to sell its phones in the U.S.
For Microsoft, the move is the latest in a yearslong push to collect royalties from electronics makers who use Google Inc.’s Android operating system, which Microsoft says uses some of its technology.
