During his 28 years at Big Blue, Phelps helped build IBM's IP business which now includes more than 35,000 patents and generates more than $1 billion in annual revenue. By contrast, Microsoft, a late comer to the field, now has about 15,000 patents, files about 3,000 applications a year and generates less than $100 million in annual IP licensing revenues.

And for Microsoft, only the size of the portfolio matters, not matter how it is formed:

"To me it doesn't make a difference if you got your portfolio through R&D or through buying it,"

He is also mentioning that Microsoft's investments in Intellectual Property Ventures, which has made 30 deals:

Separately, Phelps set up two years ago a small group that tries to spin out technologies Microsoft has developed but cannot immediately use. The so-called Intellectual Property Ventures group which has less than ten people has struck 30 deals so far, he said.

According to the Microsoft's page on IP Ventures:

IP Ventures spins-out and licenses Microsoft Research technology to entrepreneurs and companies in order to foster innovation and new product development