• Alibaba said to be disappointed with YunOS’s performance
  • Tencent WeChat’s mini programs challenge mobile landscape

Alibaba Group Holding Ltd.’s six-year-old excursion into mobile operating systems is faltering in China, casting doubt over software that bears billionaire-founder Jack Ma’s name and was once touted as key to countering Tencent Holdings Ltd.

China’s largest e-commerce company debuted YunOS in 2011, a system that underpins search, shopping and browsing that its executives last year said could attain as much as 25 percent domestic market share by the end of 2016 — surpassing Apple Inc.’s iOS. Six years on, YunOS’ slice of China software installations stands at just 2.2 percent while its share of 2016 shipments was 10 percent, researchers Canalys and Counterpoint estimate, respectively. Alibaba disputes those numbers.

Alibaba managers have grown increasingly unhappy with its sluggish adoption and have begun an internal debate around the software’s future, a person familiar with the matter said. No conclusions have been reached, the person said, asking not to be named discussing a confidential matter. Yet the talks reflect the inability of a once-vaunted initiative to forestall Tencent’s dominance in the mobile arena, secured through the utility of WeChat — a universal app that melds messaging, payments, media, shopping and on-demand services.

“Apart from Meizu, none of the other large mobile phone makers are working with them closely,” Jia Mo, a Shanghai-based analyst at Canalys said by phone. And “Alibaba can only attempt to expand its mobile operating system in China. It could run into all sorts of IP issues if it tried to go overseas.”

Meizu Technology Corp. is backed by Alibaba.

Alibaba folded the YunOS operation into its cloud computing division in February, the company said in an emailed statement. The Chinese firm said it will continue to invest in the software and push its wider adoption among the Internet of Things or connected devices, and pointed to recent advances such as a YunOS-enabled car it unveiled last year alongside automaker SAIC Motor Corp.

“YunOS is an important strategic business under Alibaba Group,” it said. The company “will continue the investment into YunOS and our IoT ecosystem.”

Android remains the most dominant operating system in China. Like Apple’s, the software serves as a gateway to Google services…