Alibaba Group Holding Ltd (BABA) Needs Key Alliances With Phone Manufacturer To Advance Against Android

Alibaba Group Holding Ltd (NYSE:BABA)

Alibaba Group Holding Ltd (NYSE:BABA) is aiming to install its mobile OS in millions of devices in the local Chinese market. However, the domination of Google Inc (NASDAQ:GOOGL)’s Android in the smartphone industry is something that Alibaba needs to deal with.

According to the recent mobile data forecast from International Data Corporation, Android operating system shipments touched 1.06 billion in 2014 with 82.3% market share whereas other operating systems, excluding iOS and Windows, account for hardly 1.6% of the global shipments. Somewhat similar picture stands in China with every 9 out of 10 smartphone devices being powered by Android.

Alibaba Group Holding Ltd (NYSE:BABA)

How Alibaba Group Holding Ltd (NYSE:BABA) handles the competition from Android and other operating systems is a key metrics to consider. According to Canalys, research firm, one of the best ways to maximize installations is to purchase stake in key smartphone manufacturers in China including Xiaomi Corp. and Coolpad Group Ltd. One of the most important factors favoring YunOS, Alibaba’s OS, is the push from Chinese government to prefer home-grown technologies.

Investing in Xiaomi is the best bet for Alibaba Group Holding Ltd (NYSE:BABA); however, Xiaomi is more about bringing users to its MIUI ecosystem and offer a complete range of online services, which dims the possibility of sing Yun in their devices. A similar issue persists with Coolpad, which has its own OS, Coolcloud, and the company has already rejected the idea of working with Yun.

At the same time, some analysts are of the opinion that the ecommerce giant is already late for entering into mobile and the best way to work in mobile industry is to acquire other phone manufacturers.  Gil Luria, Wedbush Securities Ltd., said, “If all else fails, Alibaba may consider buying a handset manufacturer. They certainly have the capital to do so.”

Alibaba Group Holding Ltd (NYSE:BABA)’s ambition to power millions of Smartphone devices in China might require a more cost-effective strategy.

This article has been written by Prakash Pandey.

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