Alibaba to Invest $590 Million in Smartphone Maker Meizu

China's Alibaba Group Holding Ltd said on Monday it will buy a minority stake in little-known domestic smartphone maker Meizu Technology Co for $590 million (roughly Rs. 3,603 crores), as the e-commerce giant extends its hardware growth strategy into mobile devices.

Alibaba, now worth $213 billion (roughly Rs. 13,00,910 crores) by market value, didn't disclose how big its holding will be in a privately owned handset maker that is a distant rival to much bigger smartphone firms like Xiaomi Inc. Based in Zhuhai, Guangdong, Meizu employs more than 1,000 people, according to its website.

The deal will help Alibaba push its mobile operating system within China through Meizu's handsets, while giving Meizu access to Alibaba's e-commerce sales channels and other resources, the companies said in a joint statement.

Alibaba has in the past concentrated on software and services, including its core e-commerce business. Now, in a move reminiscent of U.S. rival Amazon Inc's own foray into smartphones with the Fire Phone, the Meizu investment builds on Alibaba's more recent efforts to develop in hardware, like internet TV via set-top boxes.

"The investment in Meizu represents...an important step in our overall mobile strategy as we strive to bring users a wider array of mobile offerings and experiences," said Wang Jian, Alibaba's chief technology officer, in Monday's statement.

China is the world's largest smartphone market, with 557 million people accessing the internet via mobile devices, according to government data.

But smartphone sales are flagging. Shipments in China were 389 million phones in 2014, down from 423 million the previous year, according to China's Ministry of Industry and Information Technology.

Meizu also doesn't feature among China's top smartphone brands. The top four in the fourth quarter of 2014 were Apple Inc, Xiaomi, Samsung Electronics Co Ltd and Huawei Technologies Co Ltd, according to data research firm Canalys.

© Thomson Reuters 2015