Microsoft and Xiaomi, two companies in the smart phone market have encountered obstacles decided to join forces.
Xiaomi decided to pay for the use of Microsoft patents. According to the Wall Street Journal, Microsoft has authorized 1,500 patents for Xiaomi. Beginning in September, Xiaomi's mobile phone will be built with Microsoft's Office App and Skype. Xiaomi is optimistic about this cooperation case, and believes that the cooperation between the two parties will achieve the goal of establishing a relationship between Xiaomi and the global technology leader. And Microsoft found a new platform with its services.
Xiaomi faces stagnant growth and market share
"FORTUNE" pointed out that this cooperation case is very important for Xiaomi who wants to become an international consumer brand.
In fact, Xiaomi is experiencing a growth dilemma in the smart phone market. Looking at these figures, according to Counterpoint Research, Xiaomi's mobile phone growth in the first quarter fell by 9% compared to the same period in 2015. Xiaomi sold 71 million smart phones in 2015. Apple sold 232 million in comparison. As early as more than a year ago, Xiaomi also enjoyed the world's No. 1 market share, and has now fallen to Outside the top five.
In addition, the quality of Xiaomi's smart phone has not been able to catch up with Apple or Huawei, which is becoming more and more powerful. Now it is the low-cost mobile phone that sells millet in India and China. This is why Xiaomi's 2015 camp. The ratio was only flat compared to the previous year.
Can Microsoft IP protection motivate millet sales?
For Xiaomi, this cooperation with Microsoft can help it reinforce the weakness of intellectual property rights. Analysts said that because of its patent weakness, Xiaomi has become the last fingerprint-sensing company among the major smart phone manufacturers in China, and at the same time, Xiaomi does not dare to easily enter the developed market with high legal risks.
However, it is only to strengthen the patent, I am afraid it will not allow Xiaomi to successfully expand in the European and American markets. "FORTUNE" believes that Xiaomi's core business model is to sell cheap mobile phones online, which in turn attracts more consumers to use its services. However, it is difficult to replicate this model in markets outside China, such as American consumers. It is customary to buy mobile phones at the storefront, and Xiaomi’s own services are not available in markets outside China. Xiaomi’s mobile phones sold outside of China use Google’s App Store service.
Xiaomi also sees itself as a network company, saying that the music, video and game services it provides have boosted the revenue figures that every consumer can bring. However, the growth of smart phone sales is still the key. According to some surveys, the growth of Apple platform services is closely related to the sales volume of mobile phones. When consumers buy new mobile phones, they will also purchase new services, which are showing The dilemma faced by Xiaomi.
Therefore, Xiaomi hopes to bring a better foundation to his smart phone through cooperation with Microsoft. Neil Shah, head of India at Counterpoint Research, pointed out that Xiaomi may be patented at a special price. For Microsoft, Xiaomi is also an important partner in driving the ecosystem of Microsoft.
However, Microsoft, which is suffering from Waterloo in the smart phone market, and the millet facing the decline in market share and growth difficulties, can successfully stimulate sales growth, it will take time to prove.
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