In a move that surprised many in the mobile technology space, China's Xiaomi and Finland's Nokia came together yesterday to sign a business collaboration and patent licensing agreement which will see the Chinese tech major acquiring key patent assets from the Finnish mobile phone manufacturer.

The patent licensing deal, which is multi-year in nature, is inclusive of a cross license to each of the company’s cellular standard essential patents. The figures involved in the deal haven't been disclosed by either of the parties yet.

While Xiaomi might not be performing well globally including its home country China, but the brand has received massive acceptance in the Indian smartphone market. The Chinese tech major made a whopping $1 billion in revenue in India last year.

A recent report churned out by India Ratings & Research (Ind-Ra), a Mumbai-based agency that provides ratings, research and rigorous analytics of market in India, threw light on the major movement that took place in the list of market position of the top five smartphone players in India in FY17. Micromax Informatics, Lava International Ltd. and Karbonn Mobiles Pvt Ltd had to let go of their positions on the list and their positions were occupied by Xiaomi Inc., Vivo Mobile India Pvt Ltd. and Oppo Mobiles India Pvt Ltd.

The Ind-Ra report has spelled a period of worry for Indian mobile phone manufacturers. According to the report, Chinese smartphone manufacturers have been successful in capturing a whopping 51 percent of the mobile phone handset market share in India leaving their Indian counterparts much behind in their very own country.

The Ind-Ra report has also warned the Indian smartphone makers to tighten their seat belts if they wish to have a long haul in the Indian smartphone market. According to it, since Chinese players like Xiaomi have invested big bucks in brand building and manufacturing facilities in India, it shows that they’re committed to stay. Indian smartphone makers slow innovation rate and limited marketing budgets are acting as major constraints on their future in the Indian smartphone market.

As per the agreement signed between Nokia and Xiaomi, the Finnish Mobile phone manufacturer, which recently gave its classic 3310 a modern revamp, has agreed to provide its network infrastructure equipment, which was designed to deliver high capacity at low power requirements for large web providers and data centre operators.

The two companies will be coming together to work on IP routing based on Nokia’s recently announced ‘FP4’ network processor, a data centre fabric solution and optical transport solutions for data centre interconnect.

Commenting on the agreements signed between Xiaomi and Nokia, Lei Jun, Chairman and CEO of Xiaomi said, “As a company seeking to deliver more exciting technological innovations to the world, we are excited at the opportunity to work more closely with Nokia in future."

Rajeev Suri, President and CEO of Nokia welcomed Xiaomi to Nokia's family of patent licensees and said, "we look forward to working together on a wide range of strategic projects."

The two companies have decided on exploring joint opportunities in currently hot technological areas such as artificial intelligence (AI), Internet of Things (IoT) and augmented and virtual reality.

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