TikTok's ByteDance eyes the shrinking smartphone market

The Chinese firm is reportedly working on a smartphone pre-installed with its own apps including TikTok and Jinri Toutiao

28May

ByteDance, the parent company of popular video app TikTok, is planning to build its own smartphone pre-installed with a number of its own apps, according to a Financial Times report.

The article, which cited two unnamed sources, followed last week's news that the Chinese company was allegedly planning to launch a free music streaming app as soon as the end of this quarter.

Late last year, ByteDance, which was founded in 2012, completed a $3bn investment that valued the company at around $75bn, confirming its status as one of the world's most valuable startups. It operates a range of digital media platforms, including its short video platform TikTok and AI news aggregator Jinri Toutiao, which are expected to be included in the new smartphone.

The firm has been focusing on expansion of late, both domestically and internationally, leading to the acquisition of US lip-syncing app Musical.ly in 2017. Last month, the company acquired Beijing-based big data firm Terark for an undisclosed sum.

"ByteDance's latest project, the brainchild of founder Zhang Yiming, follows its acquisition of a number of patents from Smartisan, a Chinese phonemaker, and subsequent recruitment of some of its staff," the Financial Times reported. "Mr Zhang has long dreamt of a phone with ByteDance apps pre-installed."

However, the publication was unconvinced by ByteDance's decision to branch into the smartphone market, which has been shrinking for some time. It referenced attempts from Facebook and Amazon to launch their own-brand phones, both of which were swiftly abandoned.
"There's basically no space for [ByteDance] in the mass market," Jia Mo, a Shanghai-based analyst at Canalys, told the Financial Times . "They lack experience and advantage in supply chain, in channels... so its likelihood of being successful is very low."

However, Jia Mo added: "If it targets only the niche market, maybe it will have a chance by attracting niche customer groups through certain pre-installed software."

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