While Xiaomi has been doing reasonably well in China, its ability to enter Western markets has been stuffed up by its software which may be a little dodgy in terms of Western intellectual property law.

The fear is that once Xiaomi gets off its home turf, it could be attacked by legitimate companies and patent trolls keen to get a slice of cash from the company.

However with Microsoft inside, Xiaomi can present itself as legit as any other western outfit. The deal includes a patent cross-licensing arrangement and a commitment by Xiaomi to install copies of Microsoft software, including Office and Skype, on its phones and tablets.
Wang Xiang, senior vice president at Xiaomi said that this is a big collaboration agreement between the two.

Wang said the acquisition of Microsoft patents, which included voice communications, multimedia and cloud computing, on top of some 3,700 patents the Chinese company filed last year, were "an important step forwards to support our expansion internationally."

Xiaomi launched its first US device earlier this month, a TV set-top box it developed in cooperation with Google, which owns the Android operating system it and most Xiaomi devices run on. Xiaomi has also launched a tablet which runs a version of Microsoft's Windows operating system.

Jonathan Tinter, corporate vice president at Microsoft, said the company was keen to tap into Xiaomi's young, affluent and educated users by having its products pre-installed on their devices. He declined to go into detail about the patent deals, but said the overall deal was something "we do only with a few strategic partners."

Florian Mueller, a patents expert who consulted for Microsoft in the past, said it was rare for Microsoft to actually sell its patents, adding "it's possible Microsoft found it easier to impose its Android patent tax on Xiaomi as part of a broader deal that also involved a transfer of patents."