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Why Alibaba jumped into the smartphone fray


Alibaba Group announced Monday that it invested $590 million in one of China’s lesser-known smartphone makers, Meizu, a company with small market share but a long history as one of the country’s smartest device makers. In the 2000s it turned out popular Mp3 players and one of China’s first smartphones it called an iPhone-killer.


The big investment, which earned Alibaba a minority but undisclosed stake in Meizu, comes eight months after Alibaba bought outright China’s largest mobile browser company, UCWeb. That purchase was the first signal that Alibaba wanted a piece of China’s booming smartphone landscape.


“The (Meizu) investment like any other is ‘future betting’ on a company which has some promise and could be a dark-horse in the smartphone race,” says Counterpoint Research director Neil Shah. “Alibaba is essentially locking-in cool and bright brands to expand its ecosystem with its investment spree.”


Alibaba said its mobile operating system, YunOS, will be integrated into Meizu’s phones that now run on Google’s free Android operating system. A handful of tiny Chinese smartphone makers use YunOS, but the system is basically unknown in China where 80% of smartphones run on Android. In pushing its own operating system, Alibaba is taking a page from Amazon’s playbook and creating a platform on which consumers are seamlessly plugged into its shopping and entertainment sites through their phone. 

魅族手机目前使用免费的谷歌安卓操作系统。阿里巴巴表示,它的阿里云OS移动操作系统将集成到魅族手机中。有几家很小的中国手机厂商使用阿里云OS,但该系统在国内基本处于默默无闻状态——中国80%的智能手机都使用安卓系统。推广自己的操作系统是阿里巴巴对亚马逊Kindle Fire业务的借鉴。由此,阿里巴巴可以打造一个平台,让消费者的手机和阿里巴巴的购物和娱乐网站实现无缝对接。

While Alibaba gets a bigger host for its operating system, Meizu gets a shot at greater sales across Alibaba’s e-commerce platforms, which can spell life or death for brands. On the biggest online shopping day last year in China, Single’s Day in November, when Alibaba’s platforms become the de facto shopping destinations, Xiaomi sold $250 million worth of phones in 24 hours. A Meizu spokesperson said the investment will help the company get more aggressive in pricing and product lines to reach its sales goal of 20 million phones this year.


A strong comeback for Meizu, using Alibaba’s operating system, could resurrect an old fight. More than two years ago Google protested that YunOS, also known as Aliyun, was ripping off Android’s source code. When Acer announced a phone based on the operating system, after Acer had agreed not to ship “non-compatible” Android versions, Google cried foul. Alibaba responded that its engineers spent three years developing the operating system. Acer’s phone was never released.

借助阿里巴巴的操作系统,魅族强势回归,而这有可能再次点燃熄灭已久的战火。两年多以前,谷歌曾指责阿里云OS使用了安卓源代码。当时宏碁宣布将推出基于阿里云OS的手机,谷歌随即表示强烈抗议,理由是宏碁已经同意不采用“非兼容”的安卓版本。阿里巴巴则回应称,阿里云OS由自己的技术人员用了三年时间开发而成。但基于阿里云OS 的宏碁手机并未上市。

For now, Alibaba’s $590 million splurge on Monday earns the e-commerce giant a play in smartphones and makes the China market even more competitive than it was.



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