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Alibaba Invests $590M To Get Into The Chinese Smartphone Race

Alibaba Invests $590M To Get Into The Chinese Smartphone Race
[Photo: Flickr user leighklotz]

With the growing success of the iPhone in the Far East, and the emergence of Xiaomi as the world’s third-largest smartphone maker, it’s no great surprise that China represents an increasingly important market for mobile phone manufacturers.

Not one to be left out, Chinese e-commerce giant Alibaba announced early Monday that it is purchasing a $590 million stake in phone company Meizu Technology Co.

Despite holding just 2% of the market, the Meizu investment will give Alibaba an extra foothold in the Chinese smartphone industry. Last year, Alibaba announced its intentions to go mobile by buying China’s largest mobile browser company, UCWeb. Today’s news marks the next stage in that plan.

The idea is for Alibaba’s virtually unknown mobile operating system, YunOS, to be preinstalled on Meizu’s new phones, which currently run on Google’s Android platform. YunOS will then connect users to Alibaba’s shopping and entertainment sites via their phones.

If the sound of an e-commerce powerhouse entering the smartphone market reminds you of Amazon’s failed Fire Phone, you’re not completely off base—although unlike Amazon, Alibaba won’t be building the actual phone itself. Still, it’s far from a guaranteed success for Alibaba.

We’ll have to wait to see how things play out in the long term. For now, however, it’s another reminder of just how much buzz exists around the Chinese smartphone market, which is more than 550 million smartphone users strong—and how companies will do whatever they can to hop on board.

[via Reuters]LD