E-commerce giant Alibaba said it is taking a $590 million minority stake in China-based smartphone manufacturer Meizu in order to test ways of expanding its YunOS mobile operating system in the highly competitive smartphone market.
Alibaba, which last year set a new world record by raising $25 billion in an initial public offering (IPO), said the two companies will collaborate “at both strategic and business levels to achieve a deeper integration of Meizu’s hardware and Alibaba Group’s mobile operating system.”
“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 Alibaba group CTO Wang Jian in a statement.
Meizu CEO Bai Yongxiang also said in a statement that his company’s strategic collaboration with Alibaba Group “will enable Meizu to further develop our smartphone business and our smart devices ecosystem.”
Alibaba said on its blog that Meizu has been emerging as one of China’s better-known smartphone brands, although the com pany noted it is not in the same league as market leaders Xiaomi and Lenovo, which are among the top sellers of smartphones worldwide.
Indeed, figures from IDC for the fourth quarter of 2014 put Lenovo in third place globally with smartphone shipments of 24.7 million and Xiaomi in fifth place with shipments of 16.6 million. Domestic rival Huawei came between the two in fourth place, shipping 23.5 million smartphones in the last three months of 2014.
Analysys Mason noted in May last year that the Chinese vendors are well-positioned to increase their presence globally, thanks largely to the scale of the domestic market. The analyst firm said at the time that it believes 1.3 billion smartphones will be sold in China in the next five years, generating revenues of US$65 billion-$130 billion.
"China’s smartphone vendors like Coolpad, Meizu, Oppo and Xiaomi will use this revenue to drive international expansion," the company added.
At the end of 2014, China had more than 1 billion mobile phone users, of which about 40% use smartphones, according to IDC.
Alibaba is the world’s largest e-commerce company, handling $296 billion worth of transactions in the 12 months to 30 June 2014. Of that total, $71 billion worth was carried out using mobile devices.
