Microsoft makes first licensing deals with Chinese firms

Microsoft Corp. (NASDAQ:MSFT) promised to invest $100 million in business ventures with Chinese software companies and it looks like the fruits of that investment are paying off. Microsoft announced new licensing agreements on three mobile phone technologies to two Chinese companies. The software involved was developed at Microsoft's Beijing research lab and developed at its facilities in China.

Microsoft licensed mobile picture-viewing and video compression technologies to Comtech, which designs cell phones, telecommunications equipment and consumer gear for both Chinese and multinational electronics makers. The other Chinese company benefiting from Microsoft's investment in China is Talkweb, which is getting licensed access to technology that people can use to upload photos to their website and create cartoons of themselves. These cartoons can then be sent to family and friends using a phone or other multimedia messaging service.

These are only the first of many deals Microsoft hopes to make in China. This licensing strategy was used successfully in Europe and the U.S. to create start-ups built around Microsoft technologies. Microsoft licenses to existing and new companies that decide to commercialize a product Microsoft does not want to take to market itself, a win-win situation.