I plan on writing more fully about Alibaba in the coming weeks, especially as they approach their IPO, but this bit of news about them buying Autonavi strikes me as being particularly telling:

Ecommerce titan Alibaba took a 28 percent stake in Autonavi (NASDAQ:AMAP) nearly a year ago. And then in February this year the firm proposed a full buy-out of Autonavi for a premium of US$21 per share. Today Autonavi confirmed it has accepted the deal for that acquisition price, pending the approval of shareholders…The deal values Autonavi at $1.5 billion and will take the firm – owners of China’s top mobile maps app – private.

Alibaba dominated the PC era, but is in danger of being squeezed out in mobile by Tencent’s WeChat; Tencent is acquiring e-commerce companies who will be directly tied in to WeChat (and to the exclusion of Alibaba). Alibaba has tried to compete in messaging, producing their own app called Laiwang, but in a world dominated by network effects they’re getting crushed. This purchase seems to be a precursor to a very rationale response: go down the stack, and make their own flavor of Android.

Of course they need a phone to put it on. Perhaps the IPO proceeds will go towards a purchase of Xiaomi?