Alibaba To Spin Out Controversial Aliyun Mobile OS

Sep 24, 2012

The new Alibaba-made Aliyun mobile operating system was at the center of controversy last week as hardware maker Acer abruptly cancelled a press event designed to announce the launch of a new Aliyun-powered smartphone for the Chinese market. Google claimed that Aliyun was an “non-compatible” version of Android and that Acer, as a member of the Open Handset Alliance, was compelled to use only compatible versions.

Alibaba, which created Aliyun, loudly and publicly protested arguing that the operating system is entirely linux based and uses no Android code. Google contends that it’s in fact based on Android or contains elements of the Android OS. That dispute remains unresolved.

Alibaba, which just bought back more than $7 billion of its shares from Yahoo, is now spinning out the Aliyun OS as a separate company. Reuters reports that Alibaba will invest $200 million in the new entity.

Yet unless or until the new Aliyun entity can prove that Android code isn’t involved it will have a major challenge winning OEM contracts, where the targeted handset maker has a relationship with Google. By contrast, Amazon, for example, uses a “forked” version of Android and doesn’t care what Google thinks.

Some mobile handset makers (e.g., HTC) are looking to diversify beyond Android and placing new emphasis on Windows Phone accordingly. Aliyun could become another option for those targeting the Chinese mobile market, which is more than 1 billion strong.

Source: comScore (August, 2012), IPSOS (April, 2012)

Source: Marketing Landsnd