Alibaba buys $590m stake in Meizu to boost Aliyun mobile OS

Chinese e-commerce giant Alibaba has announced it is investing $590 million to grab a minority stake in Chinese smartphone maker Meizu with the apparent aim of giving a boost to Aliyun OS – its own smartphone OS derived from Android that has so far failed to gain significant traction.

Alibaba famously undertook the largest ever IPO by value last September and will have been looking for opportunities to spend this fresh cash. While it is has a very strong position in e-commerce in China, it has seen the likes of Xiaomi take the lead in m-commerce and presumably sets a high strategic priority on rectifying that situation.

“The investment in Meizu represents a significant expansion of the Alibaba Group ecosystem and an important step in our overall mobile strategy as we strive to bring users a wider array of mobile offerings and experiences,” said Jian Wang, CTO of Alibaba Group.

“This strategic collaboration with Alibaba Group will enable Meizu to further develop our smartphone business and our smart devices ecosystem,” said Yongxiang Bai, Meizu’s CEO.

Alibaba has been working on the Aliyun OS for some time, having apparently evolved it from Android, although there is considerable dispute between Alibaba and Google regarding similarities between the two. This came to a head in 2012 when Acer was about to launch an Aliyun-based phone and Google said that would result in it being denied access to Android itself, resulting in Acer aborting the Aliyun launch.

“Non-compatible versions of Android, like Aliyun, weaken the ecosystem,” Google told Ars Technica at the time. “All members of the Open Handset Alliance have committed to building one Android platform and to not ship non-compatible Android devices. This does not however, keep OHA members from participating in competing ecosystems.” Acer also had a line of Windows Phone handsets.

“It is ironic that a company that talks freely about openness is espousing a closed ecosystem,” countered Alibaba, “Aliyun OS is not part of the Android ecosystem, so of course Aliyun OS is not, and does not have to be, compatible with Android.” But the problem seemed to be that it supported Android apps – hence Google’s concerns about fragmentation.

Since no Android vendors would therefore go anywhere near Aliyun, Alibaba is essentially in the same position as Amazon if it want to promote its own platform and thus control the customer relationship – it needs to make its own phones. As Amazon has found, this isn’t easy, but partnering with an established brand such as Meizu should help and Alibaba will now have its sights firmly set on one company that does seem to have successfully implemented this model – Xiaomi.