Alibaba looks to rural China to popularize its mobile OS

Alibaba's YunOS is still struggling to become mainstream in China

E-commerce giant Alibaba Group hasn't given up on its mobile OS, and is taking the software to China's rural markets through a series of low-cost phones.

The company has partnered with mobile carrier China Telecom to sell the YunOS handsets. The eight phones will be built by lesser-known Chinese brands, and will range from 299 yuan (US$49) to 699 yuan.

Although Alibaba has its own Android apps that connect to its popular e-commerce stores, the Linux-based YunOS comes with a whole suite of company-developed services.

The software, however, hasn't gained much share in the market. In 2012, Google claimed it was a variant of its Android OS, sparking a clash that threatened to derail Alibaba's effort to popularize the mobile OS.

In China, Android dominates the smartphone landscape, but that hasn't stopped Alibaba from trying to promote its own software. Even as bigger smartphone brands have yet to adopt the YunOS, Alibaba has managed to partner with smaller Chinese vendors to develop phones for it.

The payoff could be huge. Increasingly, more Chinese users are relying on their phones to buy goods online, and Alibaba itself has over 265 million mobile active users.

By selling low-cost phones, the company is hoping to entice more Chinese rural residents to shop online, at a time when many of these users have limited access to the Internet. Given their lower education levels, many of these users have no need to go online, according to China's Internet Network Information Center.

Selling the phones might also boost the YunOS's market share, but probably only in the short-term, said Nicole Peng, an analyst with research firm Canalys.

These rural users have few expectations from these phones, and probably won't notice the difference between Android and Alibaba's software, she added. None of these phones are built by well-known brands.

"It's difficult to envision the consumers having any high loyalty to these brands," Peng said. "The next time, when they buy a phone, will they pick a YunOS phone? That's more important."

Earlier this year, Alibaba invested in Meizu, a Chinese smartphone vendor better known in the country. As part of the investment, Meizu will integrate its phones with YunOS.

"I think the Meizu partnership is a good start," Peng said. Alibaba's goal over the long-term should be to cultivate a local Chinese smartphone brand, and hope it can grow large over the next few years, she added.

A case in point is Xiaomi, a Chinese vendor that last year toppled Samsung to become the country's largest smartphone vendor. Xiaomi is now working to expand globally.

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