On Feb. 5, Microsoft (MSFT 0.70%) announced a collaborative patent licensing agreement with GoPro (GPRO 3.51%) for "certain file storage and other system technologies." GoPro stock rallied after the news, but gave up those gains within a few days.
An "iPod without iTunes"
A major problem that has plagued GoPro is its lack of efficient backup and editing solutions for its massive videos. CEO Nick Woodman has repeatedly stated that a GoPro camera was still "like an iPod without iTunes." That statement raises concerns that smartphones, which are already equipped with automatic backup solutions like Alphabet's (GOOG 0.75%) (GOOGL 0.74%) Google Drive, will render GoPro's cameras obsolete.
Last June, Woodman told TechCrunch that the company was developing a cloud-based platform for its content. Woodman didn't disclose any more details during last quarter's conference call (as transcribed by Thomson Reuters), but stated that GoPro would ensure "that any new and existing hardware products do a better job of connecting to smartphones and the cloud." He also declared that the Hero 5 would be "the most connected and convenient GoPro" that the company has ever made.
GoPro meets OneDrive?
Partnering with Microsoft means that the action camera could potentially link its software to the tech giant's OneDrive cloud service. Through the partnership, Microsoft might offer GoPro cloud access at discounted prices. This move could also drive a wedge between GoPro and Google, its virtual reality partner for 360-degree videos on YouTube.
The partnership could also be focused on improving the efficiency of GoPro's SD card storage technologies. Microsoft offers the exFAT file system (for saving larger files on flash-based storage between 32GB and 256TB) for licensing, so a cross-licensing deal might improve the ability of GoPro's next-gen cameras to save larger files.
But it's all speculation for now...
GoPro investors should note that Microsoft has signed over 1,200 similar agreements with companies in the past. Most of those deals were for minor technologies that didn't significantly alter the companies' outlooks. So until GoPro actually reveals something solid built on Microsoft's technologies, the overall impact of this licensing agreement will be limited.
