In an effort to expand its presence in mobile technology, Chinese e-commerce giant Alibaba, which holds the record for the largest US-listed initial public offering, has agreed to purchase a $590 million minority stake in Meizu, a relatively small domestic smartphone manufacturer.
The deal comes just a few months after the companies entered into a partnership under which the Zhuhai-based smartphone vendor agreed to use Alibaba’s YunOS mobile operating system to power its own handsets.
The NYSE-listed e-commerce giant launched YunOS with an aim to drive users to its e-commerce apps and other services. However, the mobile operating system failed to leave a mark in a market which is heavily dominated by Google's Android. So, a deal with Meizu will benefit Alibaba in that it would open up more hardware for the Android-based OS.
“The investment in Meizu represents a significant expansion of the Alibaba Group ecosystem and an important step in our overall mobile strategy as we strive to bring users a wider array of mobile offerings and experiences,” said Alibaba Chief Technology Officer Jian Wang.
In return, Meizu will get access to Alibaba's vast online distribution network and other resources. The Chinese smartphone manufacturer, which operates a Xiaomi-like online sales model, shipped a record 1.5 million smartphones last month, although it is yet to break into the country's top five smartphone companies.
This isn't Alibaba's first mobile investment; back in March last year, it led a $280 million round for messaging app Tango, followed by investments in US-based mobile gaming companies Kabam and Ouya.