BEIJING • Alibaba Group Holding's six-year-old excursion into mobile operating systems is faltering in China, casting doubt over the software that bears billionaire founder Jack Ma's name and was once touted as key to countering Tencent Holdings.
China's largest e-commerce company debuted YunOS in 2011, a system that underpins search, shopping and browsing that its executives last year said could attain as much as 25 per cent domestic market share by the end of 2016 - surpassing Apple's iOS.
Six years on, YunOS' slice of China software installations stands at just 2.2 per cent while its share of 2016 shipments was 10 per cent, researchers Canalys and Counterpoint estimate, respectively. Alibaba disputes those numbers.
Alibaba managers have grown increasingly unhappy with its sluggish adoption and have begun an internal debate around the software's future, a person familiar with the matter said. No conclusions have been reached, the person said.
Yet the talks reflect the inability of a once-vaunted initiative to forestall Tencent's dominance in the mobile arena, secured through the utility of WeChat - a universal app that melds messaging, payments, media, shopping and on-demand services.
"Apart from Meizu, none of the other large mobile phone makers are working with them closely," Shanghai-based analyst Jia Mo at Canalys said. "Alibaba can only attempt to expand its mobile operating system in China. It could run into all sorts of IP issues if it tried to go overseas."
Meizu Technology, backed by Alibaba, is a distant rival to Oppo, Huawei Technologies and Vivo.
Positioned as an important component in Alibaba's shift to mobile, YunOS was offered as a means to capture the time spent online by a growing population of mobile Internet users, now standing at 695 million.
The company wanted to grow beyond mobile e-commerce, hoping the software could increase usage in search, music and video.
Counterpoint Research pegged YunOS' share of 2016 shipments at about 10 per cent and growing to 12 per cent this year, an uptick possibly driven by Chinese government backing, carrier tie-ups and Meizu's latest models.
Alibaba disputes those numbers, citing a report from Sino Market Research that shows YunOS powered more than 16 per cent of phones shipped in the first quarter of 2016.
Alibaba folded the YunOS operation into its cloud computing division in February, the company said in a statement.
The Chinese firm said it will continue to invest in the software and push its wider adoption among the Internet of Things (IoT) or connected devices, and pointed to recent advances, such as a YunOS-enabled car it unveiled last year alongside automaker SAIC Motor Corp.
"YunOS is an important strategic business under Alibaba Group," it said. The company "will continue the investment into YunOS and our IoT ecosystem".
BLOOMBERG
