Mobile

The Acer Smartphone That Never Was


View of an Acer android mobile phone, model CloudMobile A800

Courtesy Acer

View of an Acer android mobile phone, model CloudMobile A800

(Updated to include Acer’s statement on the canceled press conference.)

It was going to be the big mobile-phone breakthrough Chinese e-commerce powerhouse Alibaba needed. On Thursday afternoon in Shanghai, Taiwanese computer and phone vendor Acer (2353:TT) was going to unveil a new smartphone for China that would run on Aliyun, a cloud-based, open-source operating system developed by Alibaba. The event space was booked. The corporate logos were in place on stage. And the press release was prepared to go online, with Alizila, the in-house blog of Alibaba, about to publish gushing comments from Acer’s chief executive officer, J.T. Wang.

But the big event never happened. Shortly before it was supposed to begin, Alibaba says, Acer backed out because of pressure from Google (GOOG). The U.S. search giant, Alibaba alleges, was not pleased about Acer’s decision to work with a company pushing its own operating system rather than the Google-backed Android.

Instead of the press release, Alibaba wound up running a desultory item about the sudden turn of events. “A Sept. 13 news conference announcing the China launch of a high-end Acer smartphone running a cloud operating system made by Alibaba Group was abruptly canceled after Google, owner of the Android OS, threatened to cancel Acer’s license to use Android for its other phones if the launch went ahead,” the company reported on Alizila.

In a statement, Acer said the following:

“Regarding the abrupt cancellation of yesterday’s press conference with Alibaba in China, Acer expresses deep regret and sincerely apologizes for the inconvenience caused to our media friends. Acer will continue working with its strategic partners in China to create improved product and service offering, and looks forward to sharing the results of our win-win developments in the near future.”

Alizila quoted a spokesman for Alibaba Cloud Computing, developer of the Aliyun 2.0 cloud OS, calling Google’s action “clearly unfair to consumers and we are concerned about the impact on customer access to competitive products.’”

Representatives from Google did not return Bloomberg Businessweek’s calls seeking comment.

The Acer phone, called the CloudMobile A800, would not have been the first smartphone in China to use Alibaba’s operating system. The company introduced Aliyun, its Linux-based OS, last year, working initially with local handset maker Tianyu. In June, Alibaba announced it had signed up an additional partner, appliance and consumer electronics company Haier (1169:HK).

Since there were already two companies using the Alibaba OS, why would it matter that Alibaba had found a third partner? The Acer phone would have raised the profile of the Alibaba OS. The companies that currently use the platform are Chinese ventures that target the local market with inexpensive smartphones; a tie-up with Acer would suddenly make Alibaba’s OS more than just a low-cost Android wannabe for entry-level phones.

Indeed, Acer’s phone wasn’t going to be a no-frills handset—the Wall Street Journal reported on Wednesday that Acer planned on selling the CloudMobile A800 for 2,999 yuan ($474), making it the most expensive smartphone in the country. As Alibaba planned to announce in its statement, the phone was going to weigh just 125 grams, making it slimmer and lighter than Apple’s iPhone 4S. It would have a 4.3-inch display developed by Hitachi, a 1.5 GHz dual-core processor from Qualcomm (QCOM), an 8-megapixel camera, and other features. And that was going to be just the beginning: According to the Journal, Acer was going to introduce a second Aliyun-powered smartphone in October.

The Acer phone would thus have been a major step forward for Alibaba, which has had a slow start for its operating system. From its launch in July 2011 to the announcement of the Haier deal in June 2012, sales of Aliyun-powered smartphones amounted to more than 1 million handsets, Alibaba reported on its in-house blog. That’s a tiny figure in a market with smartphone sales of 72.1 million last year and 113 million this year.

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Einhorn is Asia regional editor in Bloomberg Businessweek’s Hong Kong bureau. Follow him on Twitter @BruceEinhorn.

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