Microsoft is about to hit it big with one of China's top smartphone manufacturers: Xiaomi. It has announced today a multi-faceted deal with the company including sales of patents, cross-licensing arrangements, and software pre-installation, expanding its OEM partnerships and its services' worldwide reach while also providing Xiaomi with the support it needed to enter more markets.

Microsoft will be selling 1500 patents to Xiaomi — it's not clear whether these came from the Nokia acquisition, its many other acquisitions, or ones that it originally filed for. Regardless, according to Wang Xiang, senior vice president at Xiaomi, this should beef up Xiaomi's arsenal of patents and should, theoretically, make it easier for the company to enter Western markets with lesser friction from other patent holders. It might be one of the rarest occasions you'll come across where Microsoft sells patents, but both analysts and logic say that it probably had to do it in order to strike the larger deal with Xiaomi.

And that larger deal includes a patent cross-licensing agreement that should further solidify Xiaomi's legal grounds as well as another agreement to preload Microsoft's services and apps on Xiaomi's phones and tablets. Given Xiaomi's reach in China, India, and other Asian countries, this would allow Microsoft to considerably widen its user base.

The deal's details haven't been disclosed so it's impossible to tell how much money has changed hands and in which direction, but it seems like a mutually beneficial one for both parties. It also strengthens Microsoft's position as a service provider as opposed to a hardware maker, a trend I keep seeing time and again in the company's latest moves and deals.

Press Release

Microsoft and Xiaomi expand partnership to bring productivity services to millions of devices and customers

REDMOND, Wash., and BEIJING — May 31, 2016 — Microsoft Corp. and Xiaomi Inc. have expanded their global partnership to provide innovative user experiences on mobile devices. As part of the agreement, Xiaomi will ship Microsoft Office and Skype on Xiaomi Android 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. The companies’ new collaboration also includes a cross-license and patent transfer agreement.

“We are excited to be working closely with Microsoft on a broad technology collaboration partnership,” said Xiang Wang, senior vice president at Xiaomi. “As demonstrated by this agreement with Microsoft, Xiaomi is looking to build sustainable, long-term partnerships with global technology leaders, with the ultimate goal of bringing the best user experience to our Mi fans.”

“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.”

Beginning in September 2016, Xiaomi Android devices, including Mi 5, Mi Max, Mi 4s, Redmi Note 3 and Redmi 3, will come pre-installed with Microsoft Word, Excel, PowerPoint, Outlook and Skype applications. Specific offerings may vary by device, market and mobile operator.

This agreement builds on the companies’ partnership with Windows 10 on Mi Pad and Microsoft Azure powering the Mi Cloud service. Partnerships with companies such as Xiaomi are central to Microsoft’s strategy to work with industry leaders around the world to meet the needs of joint customers.

About Xiaomi

Xiaomi was founded in 2010 by serial entrepreneur Lei Jun, who believes that high-quality technology doesn’t need to cost a fortune. We create remarkable hardware, software, and Internet services for and with the help of our Mi fans. We incorporate their feedback into our product range, which currently includes the Mi Note Pro, Mi Note, Mi 5, Redmi Note 3, Mi TV, Mi Band and other accessories. With more than 70 million handsets sold in 2015, and products launched in Taiwan, Hong Kong, Singapore, Malaysia, Philippines, India, Indonesia and Brazil, Xiaomi is expanding its footprint across the world to become a global brand.

About Microsoft

Microsoft (Nasdaq “MSFT” @microsoft) is the leading platform and productivity company for the mobile-first, cloud-first world, and its mission is to empower every person and every organization on the planet to achieve more.

Note to editors: For more information, news and perspectives from Microsoft, please visit the Microsoft News Center at http://news.microsoft.com. Web links, telephone numbers and titles were correct at time of publication, but may have changed. For additional assistance, journalists and analysts may contact Microsoft’s Rapid Response Team or other appropriate contacts listed at http://news.microsoft.com/microsoft-public-relations-contacts.