China’s Alibaba enters smartphone battle

E-commerce giant to take $590m minority stake in little-known handset vendor

Tags: Alibaba.comChina
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China’s Alibaba enters smartphone battle Alibaba chairman Jack Ma hopes to drive the company’s software platform through inclusion in Meizu handsets. (Getty Images)
By  Stephen McBride Published  February 9, 2015

Chinese e-commerce leviathan Alibaba is preparing to step into the smartphone ring by taking a $590m minority stake in little-known smartphone vendor, Meizu Technology, Reuters reported.

Meizu controls an estimated 2% of the domestic market, way behind rivals such as Xiaomi and Huawei. But Alibaba hopes to drive its software platform through inclusion in Meizu handsets, while Meizu will receive access to Alibaba's e-commerce clout.

Analysts see the $590m stake as a costly venture for Alibaba, which has a market value of $213bn.

"You could say they're spending $590m to experiment a bit and see what happens; it's an expensive experiment, right?" said Michael Clendenin, managing director at Shanghai-based RedTech Advisors.

"My concern is that some Internet players are confusing being able to just spend a couple hundred million dollars to buy a piece of hardware that looks pretty cool but is essentially a copy of what Apple has done and what Xiaomi has done," he said.

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