Xiaomi maintains competitive pricing; Removes onus of Royalties on customers

Chinese smartphone maker, Xiaomi, suffered a major setback in India toward the end of 2014, as the Delhi High Court asked it to temporarily discontinue the sale of its smartphones in India. Subsequently, the Court decided that Xiaomi could go on with the sale of models that use Qualcomm chips until February 5, when the next hearing for the patent case is scheduled.

Xiaomi is facing legal troubles in India since it was sued by Swedish technology company, Ericsson, some time ago, for allegedly infringing eight of its patents. In general, a company is required to pay patent royalties in such cases and that burden of increased cost per unit is transferred to the consumers. However, Xiaomi has assured that it will continue making smartphones of “low price-performance ratio” available for users and the ongoing patent battle will have no effect on the pricing of its devices in India. Xiaomi plans to continue launching new and competitively priced products in India. It plans to bring in the flagship Mi 4 in India this year and will also be launching other devices like the Mi TV.

With the Court partially lifting the ban and allowing Xiaomi to sell Qualcomm-powered handsets, it will now be able to sell Redmi 1S and the Redmi Note 4G in India. Qualcomm has entered into cross licensing agreements with a number of Chinese smartphone makers who use its chips, allowing them all to use each other’s patents without facing any legal hurdles. The arrangement benefits companies like Xiaomi, which have a small contribution in the patent pool. At present, Xiaomi has over 1,600 patent applications, the majority of which were filed in the last two years. Xiaomi has got 124 patent grants; only 13 of those are inventions, the rest being the design and utility model patents.

Emphasising on the need of a robust risk mitigation plan, Manu Jain, head of India operations at Xiaomi stated, “We will probably need to be a little more cautious. We will need to be more proactive in putting together a risk management or mitigation plan, to ensure that we can try and foresee any potential risk that might be coming well in advance, not only a court case.”

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