Alibaba Acquires Stake in Obscure Mobile Company

Mobile CommerceIn its attempt to promote its new mCommerce platform, Alibaba has bought a major stake in Chinese smartphone maker Meizu, according to a Reuters article by Paul Carsten and John Ruwitch. The move has surprised many industry watchers, given that Meizu is relatively obscure in China, holding less than two percent market share in the country.
Alibaba’s purchase cost a whopping $590 million, and it also granted Meizu access to its eCommerce channels. It is, frankly, a confusing move. Alibaba is a huge player in the online commerce field, both in China and globally, valued at $213 billion. In promoting its Alipay mCommerce system the company could easily have approached bigger smartphone players such as Xiaomi and Lenovo with clout.
Moreover, this year is going to see some intense competition in China as Android and Apple enter the mCommerce battle. And on top of that, Carsten and Ruwitch note that smartphone sales were down in China last year from the year before.
However, it’s worth noting that cheapening technology costs have recently started to allow makers of low-end smartphones to compete agains the bigger players, eating away at the market share of giants like Samsung. Meizu is one of those little competitors. If Alibaba is looking to market Alipay as the cheap option, available for everyone, the Meizu stake might just prove itself a good investment.