--Acer will release new smartphone in China Friday that runs on
Alibaba Group's Aliyun mobile operating system
--Acer's new CloudMobile A800 smartphone will be its
highest-priced smartphone in China
--Acer's smartphone launch comes as Alibaba is trying to take on
Google's Android with Aliyun in China
(Updates throughout, adding executive comments from Acer and
Alibaba)
By Juro Osawa
HONG KONG--Taiwanese personal computer maker Acer Inc. (2353.TW)
said Tuesday it will release a new smartphone in China that is
powered by Aliyun, a mobile operating system developed by Chinese
e-commerce giant Alibaba Group Holding Ltd. that is trying to take
on Google Inc.'s (GOOG) dominant Android platform.
The new smartphone by Acer--the world's fourth largest PC maker,
which is struggling to compete in the mobile space--is an
indication that Alibaba is seeing stronger demand from handset
makers for its Aliyun smartphone operating software it launched
last year.
The release also comes amid discussions world-wide about
possible alternatives to Android, as the technology industry is
closely watching Apple Inc.'s (AAPL) patent war against rival
smartphone makers using the Google software.
"We chose Aliyun for the new smartphone because of the user
experience it can offer," said Dave Chan, general manager of Acer's
global smartphone business group overseeing Chinese operations.
Aliyun is also easy for first-time users to navigate, he said.
Unlike Apple's iOS or Google's Android, on which apps are
installed one the device, Aliyun runs Web-based apps that are
stored on remote servers. The system also comes with its own
mapping and email applications. Alibaba spent about three years
developing Aliyun, which the company unveiled in July 2011. The
project involved more than 1,600 engineers, the company said.
Acer said its CloudMobile A800 smartphone, which will go on sale
Friday, will be its highest-priced smartphone in China, selling for
2,999 yuan ($473). Acer said it will also release the same handset
in other parts of the world other than China, but the ones sold
outside China will be powered by Android even though the hardware
is the same as the Aliyun-based model.
In China, people who purchase the new phone at Acer's online
store on Alibaba's Tmall shopping website will be offered a special
promotion deal, Acer said, without elaborating. Acer entered
China's smartphone market last year, but has little presence so
far.
After Friday's release of the new Aliyun-based smartphone, Acer
plans to release another Aliyun-based model next month, followed by
a few more next year, Mr. Chan said.
For Acer, which has seen its share price decline sharply over
the past two years amid sluggish PC demand, mobile devices will
likely play key roles in its efforts to turn its business around.
"China is definitely important for our smartphone business," Mr.
Chan said.
Acer is the third handset maker to use Aliyun. Currently,
Beijing Tianyu Communication Equipment Co., whose phones are sold
under its K-Touch brand, and major home appliances maker Haier
Electronics Group Co. (1169.HK) sell smartphones that run on
Aliyun.
In a recent interview with the Wall Street Journal, Alibaba
Group Chief Strategy Officer Zeng Ming said the company expects the
number of smartphone makers using Aliyun to increase to five by the
end of this year. "We want to be as strong as Android," Mr. Zeng
said.
For Alibaba, which operates shopping websites Taobao and Tmall,
part of the incentive for developing Aliyun came from the expected
migration of online shoppers from PCs to mobile devices, Mr. Zeng
said, adding that Aliyun could help generate more mobile e-commerce
transactions.
While Microsoft Corp.'s (MSFT) Windows Phone is the strongest
alternative to Android for now, other lesser-known platforms such
as Aliyun are also drawing more attention after Apple's U.S. court
victory last month in its patent litigation against Samsung
Electronics Co. (005930.SE), the world's largest smartphone vendor
with a lineup consisting mainly of Android-based devices.
Both Acer and Alibaba see opportunities in China's mobile
market, which is not only gigantic but diverse.
According to market-research firm IDC, China is set to overtake
the U.S. this year as the world's largest smartphone market. China
will account for 26.5% of global smartphone shipments in 2012,
while the U.S. will take up 17.8%, IDC said. The Chinese market has
room for a broad range of handset vendors, from high-end players
like Apple to those selling inexpensive smartphones that cost less
than $200.
Still, replacing Android, which powered 68.1% of smartphones
shipped world-wide in the second quarter, won't be easy because the
Google platform has already build an enormous ecosystem around the
world with app developers, some handset makers say. "Nobody can
challenge Android for the time being," said Luo Zhongsheng, the
head of the handset business at China's ZTE Corp. (0763.HK), in a
recent interview.
Alibaba's Mr. Zeng acknowledged in the interview that it will
take time for Aliyun to become a major platform. He said the
advantages for Aliyun include, for example, the integration of the
online payment services provided by Alipay, an Alibaba affiliate,
into the operating system to make mobile transactions easier and
more secure.
Acer's Mr. Chan said the company still has a lot of work to do
in China, especially in terms of marketing and branding, but it is
building foundations for growth by launching Aliyun-based
smartphones.
Write to Juro Osawa at Juro.Osawa@wsj.com
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