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Chinese web tat flogger Alibaba finally has some good news to report after sales of smartphones based on its Aliyun OS hit the million sales milestone in the People’s Republic less than a year after its launch.

The e-commerce firm’s profits have been taking a hammering recently thanks to a slowing Chinese economy, investments designed to take the site upmarket and its whopping $7.1bn (£4.4bn) buy back of half of Yahoo!’s stake in the company.

The firm’s bread and butter is in B2B and C2C e-commerce and online payments, but it also sees money to be made from the huge local domestic smartphone market and launched the Linux-based Aliyun OS out of its AliCloud business in July 2011.

The million-unit sales stat, reported by Chinese tech site Sohu IT (via TechInAsia) would appear to justify the investments made by the firm in building out its mobile ecosystem, although it faces fierce competition from a slew of local rivals, most of whom have based their home-grown platforms on Android.

An IDC report last week highlighted the challenge from handset makers such as Xiamo with its MIUI platform, web rivals such as Baidu with Yi and even operators like China Unicom (woPhone).

The key for most local players as they “build fences and drive stakes into the ground” of the country’s fast-growing mobile market is to evolve lucrative revenue streams by offering domestic users a familiar Chinese interface and local services.

For Alibaba this probably means driving mobile users towards its e-commerce and payments offerings through deep integration with those cloud-based services, although the firm has cannily allowed users to run Android apps on its platform thanks to a virtual machine.

Aliyun launched on the less-than-eye-catching Tianyu W700 - which Sohu IT said sold over 200,000 devices – and then the W800.

In 2012 it has been launched on the W806 and W619 models, which come in at a budget 1499 yuan (£152) and 699 yuan (£70) – not a bad strategy given the low end of the market is likely to see a surge in take-up as the feature phone users which still dominate in China gradually move off their legacy platforms and devices. ®

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