Tech Transformers

Alibaba’s new bid for mobile dominance in China…

Alibaba has partnered with state-backed China Telecom to sell budget smartphones in the country's small cities and rural areas, in a further bid to boost its presence in untapped parts of the country.

The devices, called Tianyi Taobao Shopping Handsets, will come pre-installed with either the Taobao shopping app – Alibaba's consumer marketplace service - or its own YunOS mobile operating system.

Eight models made by fairly unknown brands such as Uniscope, Ctyon and Kingsun, will be sold at prices ranging from 299 yuan ($48) to 699 yuan ($113). Six slightly more expensive models by device makers such as Coolpad and TCL will also be available.

Inside Alibaba Group Holdings headquarters.
Jeff Pohlman | CNBC

All of the devices are on sale from Monday and are available through China Telecom's online store on Tmall – another e-commerce site run by Alibaba - and at the carrier's physical stores across rural China.

The move sheds yet more light on Alibaba's ambitions in the mobile space with its own operating system.

YunOS has been around since 2011 but to date has made no real strides in penetrating the smartphone user base in China, where Google's Android OS is dominant. Through this partnership, however, Alibaba will have access to China Telecom's 186 million users.

In February, Alibaba splashed $590 million on a minority stake in relatively unknown Chinese smartphone maker, Meizu, in order to push its software and services to more users.

By partnering with existing device makers, Alibaba does not have to spend money on manufacturing its own smartphones -- a strategy that Amazon tried with the Fire Phone last June, which was met with poor take-up.

Alibaba boss Jack Ma has previously said that the company would focus on expanding its presence in rural areas of China, and has already made significant inroads into some areas. Indeed, the company's e-commerce services have become so important to the economies of many rural areas that some have been dubbed "Taobao villages."

A report by AliResearch, the company's research arm, estimates China's that e-commerce market will hit 460 billion yuan ($75 billion) by 2016, with an increasing number of transactions made on mobile due to poor broadband infrastructure and the high costs of desktop computers.

The Tianyi Taobao Shopping Handsets will come with four months of free 2G internet to help users shop on their mobiles.