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New Smartphone Moves From Alibaba, China Mobile

Smartphone image via Shutterstock

Smartphone image via Shutterstock

We’re seeing some interesting new moves in the smartphone space from e-commerce leader Alibaba and dominant carrier China Mobile, as each makes big new bets in the fast-evolving area. Alibaba is launching its mobile operating system on a new series of smartphones with several Chinese partners, following a similar aborted attempt last year. China Mobile, meanwhile, is planning a major overhaul for its popular but rapidly aging Fetion mobile messaging service, in an attempt to compete with newer, more popular third-party apps like Tencent’s WeChat. These are just the latest moves by Chinese Web firms, mobile carriers, and smartphone makers looking to develop products and services to take advantage of high speed mobile data services. Such initiative are likely to accelerate in the next few years as China’s three mobile carriers roll out state-of-the-art 4G networks, which could happen as soon as late this year.

From the consumer’s perspective, this explosion of new products and services will be both a blessing and a burden, bombarding them with a huge array of new products and services from big names like Alibaba and China Mobile and also many smaller up-and-comers. The huge addition of so many new products and services will also be costly for developers, especially since many of these offerings will ultimately fail to find a big audience.

All that said, let’s take a closer look at the latest news, starting with Alibaba’s new move in the smartphone space. That initiative will see China’s leading e-commerce firm launch six new cellphone models equipped with its newly rebranded operating system called Ali Mobile OS.

Alibaba hopes to create its own developer ecosystem for the new OS, similar to what Google and Apple have done with their popular Android and iOS operating systems. To that end, Alibaba has said it will spend one billion yuan, or about $160 million, to help developers make software for the platform. Alibaba is initially working with five smaller handset makers on this initiative, including names like Zopo and Amoi Technology.

Some readers may recall that Alibaba was planning to launch smartphones equipped with its own OS last fall, but ultimately had to abort that campaign. In that instance, leading Taiwanese PC maker Acer was going to manufacture the smartphones, but ultimately changed its mind under pressure from Google, which said the Alibaba OS was using a variant of its open-source Android system in an unauthorized way.

From Alibaba let’s move quickly to China Mobile, which has reportedly budgeted 600 million yuan to overhaul Fetion, its service that lets subscribers send text messages for free by routing them over the Internet. The service was once quite popular, but is quickly losing its audience to more advanced, feature-rich services like WeChat, Whatsapp, and Line.

This latest development is interesting, since reports have appeared regularly over the last year about the future of Fetion. Many of those have indicated that China Mobile was preparing to scrap its relationship with Fetion’s developer, Ultrapower; but these latest reports indicate China Mobile may want to revamp the service to try to compete with WeChat and other similar products. Such a move would come as China Mobile tries to negotiate a revenue-sharing agreement with Tencent for WeChat, which has rapidly risen to become China’s most popular mobile instant messaging service.

Both China Mobile and Alibaba should be commended for their efforts, as each undoubtedly realizes the critical role that products and services for smartphones will play for their future development. That said, I do think that both of these initiatives will face a big uphill battle for acceptance and could ultimately fail, since both will have to compete against well established players.

Doug Young lives in Shanghai and writes opinion pieces about tech investment in China for Techonomy and at www.youngchinabiz.com. He is the author of a new book about the media in China, The Party Line: How the Media Dictates Public Opinion in Modern China.

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