Monday, February 9, 2015

Alibaba is making a big play in the smartphone market

alibabaJason Lee/ReutersFemale delegates take "selfies" with their iPhones with Alibaba Group Executive Chairman Jack Ma as he arrives for the Fifth Conference of Zhejiang Chamber of Commerce in Beijing, December 6, 2014.BEIJING (Reuters) - China's Alibaba Group Holding Ltd said on Monday it will buy a minority stake in little-known domestic smartphone maker Meizu Technology Co for $590 million, as the e-commerce giant extends its hardware growth strategy into mobile devices.

Alibaba, now worth $213 billion by market value, didn't disclose how big its holding will be in a privately owned handset maker that is a distant rival to much bigger smartphonefirms like Xiaomi Inc. Based in Zhuhai, Guangdong, Meizu employs more than 1,000 people, according to its website.

The deal will help Alibaba push its mobile operating system within China through Meizu's handsets, while giving Meizu access to Alibaba's e-commerce sales channels and other resources, the companies said in a joint statement.

Alibaba has in the past concentrated on software and services, including its core e-commerce business. Now, in a move reminiscent of U.S. rival Amazon.com Inc's own foray into smartphones with the Fire Phone, the Meizu investment builds on Alibaba's more recent efforts to develop in hardware, like internet TV via set-top boxes.

"The investment in Meizu represents...an important step in our overall mobile strategy as we strive to bring users a wider array of mobile offerings and experiences," said Wang Jian, Alibaba's chief technology officer, in Monday's statement.

China is the world's largest smartphone market, with 557 million people accessing the internet via mobile devices, according to government data.

But smartphone sales are flagging. Shipments in China were 389 million phones in 2014, down from 423 million the previous year, according to China's Ministry of Industry andInformation Technology.

Meizu also doesn't feature among China's top smartphone brands. The top four in the fourth quarter of 2014 were Apple Inc, Xiaomi, Samsung Electronics Co Ltd and HuaweiTechnologies Co Ltd, according to data research firm Canalys.

 (Reporting by Paul Carsten; Editing by Kenneth Maxwell)

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