China’s e-commerce giant Alibaba Group announced today it will invest $590 million to take a minority stake in mainland mobile phone maker Meizu Technology, giving it a captive hardware platform for its mobile operating system.
Alibaba didn’t specify the size of its interest in Meizu, a privately-owned company based in Guangdong province with more than 1,000 employees.
Alibaba, which recently invested $10 million in game-console maker Ouya, hasn’t had much success pushing its YunOS into the country’s top-five makers’ smartphones, which mostly run on Android. In October Meizu launched a model with the YunOS, which has been around since 2011.
The deal will give Meizu access to Alibaba’s e-commerce sales channels, the companies said in a statement.
Meizu isn’t one of the top-ten smartphone makers in China, according to Analysys International.
The news comes just days after Chinese internet player Baidu reportedly will invest more than $100 million in Lenovo’s new smartphone brand, ShenQi.
After spectacular growth for the past few years, China’s smartphone market has been softening as penetration rises (already 52 per cent at China Mobile) and operators cut back handset subsidies, following the government’s call for subsidies to be reduced by a combined CNY40 billion ($6 billion) over the next three years.
The country’s total handset shipments last year dropped 22 per cent to 452 million units, according to the China Academy of Information and Communications Technology. Smartphones, which accounted for 86 per cent of total shipments, fell 8 per cent to 389 million units.