Alibaba props up mobile OS with investment in Chinese smartphone maker

Alibaba Group is pumping US$590 million into a Chinese smartphone maker that’s been helping the e-commerce company promote its own mobile OS against Google’s Android.

The Chinese giant said Monday it would take a minority stake in Meizu, a smartphone brand in China already battling for visibility in a crowded market.

The size of the stake wasn’t disclosed, but the two companies will integrate Meizu’s hardware with Alibaba’s mobile operating system, known as YunOS. In addition, Alibaba will leverage its e-commerce resources to help Meizu sell its products.

Alibaba is best known as China’s leading online retailer, with its two sites Taobao Marketplace and Tmall.com. But as more Chinese rely on their smartphones to go online, the company has tried to develop its own mobile operating system, as a way to popularize its Internet services.

It debuted its mobile OS back in 2011, but the software has struggled to take off, at a time when Google’s Android remains the dominant smartphone platform in China.

The e-commerce giant, however, expects its efforts to pay off in the long run. “The dominant player today may not be the dominant player tomorrow,” said Alibaba Executive Vice Chairman Joseph Tsai back in November.

To expand YunOS, Alibaba has been trying to get bigger-name Chinese handset makers to use the software. So far, Meizu has been the most notable brand, and in October it came out with phones installed with the OS.

In terms of shipments, Meizu isn’t a key smartphone maker compared to other Chinese brands such as Xiaomi, Lenovo or Huawei. But the company has its own avid fanbase in China, and is releasing more phone models, including a new budget Android handset at 699 yuan (US$113).

It’s unclear to what degree Meizu will use Alibaba’s YunOS, when its older products have instead relied on Android. But by joining forces, the two companies could pose a threat to other smartphone makers in the Chinese market, although the competition isn’t letting up.

Fast-rising Xiaomi is not only coming out with more Android handset models, but expanding into other devices such as tablets, smart TVs and even air purifiers.

Lenovo, on the other hand, has re-introduced in China its newly acquired Motorola brand, which is supporting devices with a more vanilla Android experience.

Apple, however, is posting strong growth with its new iPhone 6 models, and became China’s number one smartphone vendor in the fourth quarter, according to research firm Canalys.