As a writer you always try and think of something fun and interesting to start an article, grab your reader’s attention and keep them reading. However if you’ve read this headline you pretty much know the level of the story and want some more info. China’s giant online market place Alibaba Group is buying a stake in the somewhat strange mobile maker Meizu.
As the giant holding group looks to push forward on a planned expansion into mobile, how big of a stake is unknown. However the $590million dollars it is spending may buy a pretty hefty chunk of a mobile maker that’s a bit player in comparison to the likes of Xiaomi, Huawei and even Lenovo. Analysis estimates Meizu’s share to be below 2% of the market.
iPhone Look A Likes?
Alibaba still claim this is a minority stake and will have no effect on the way the company trades. However 2% of a market measured in billions and a penetration set to hit 87% in 2016 that is still a huge number of phones in people’s hands. Meizu hit 2 million shipments in the last quarter of 2014, despite a sales slowdown in the Chinese mobile market. China’s Ministry of Industry and Information Technology gave figures showing a fall of 34 million sales in 2014 compared to 2013.
“My concern is that some internet players are confusing being able to just spend a couple hundred million dollars to buy a piece of hardware that looks pretty cool but is essentially a copy of what Apple has done and what Xiaomi has done,” Michael Clendenin, Managing Director at Shanghai-based RedTech Advisors.
Despite $590 million being a mere drop in the estimated $213 billion worth of Alibaba, it’s a high price to pay for such a small slice of the mobile market. With stake holders to please and the likes of Yahoo relying on Alibaba to balance its books – it will have to see a return very quickly. It’s a lot to splash out on an experiment to see if it can push its Android fork Yun OS further.
As all Western mobile makers look at a push into Asia to bolster global sales, it may be that Meizu may start looking at cracking the West in a falling mobile market at home. Unfortunately this would mean a major change from a market where everything looks like everything else!