Alibaba Group is reportedly planning to release its own mobile phone in the third quarter. And it’s not the only internet service provider which is interested in smart phone market. Last month, rumors say Baidu will release an Android-based Mobile OS called Qiushi(which means fruits in autumn) by the end of this year. It is also said that Xiaomi Tech plans to launch its own mobile phone with its customized Android UI called MIUI.

Alibaba Group may partner with Beijing-based phone maker Tianyu to release its smart phone which will preinstall Alibaba mobile operating system and integrate Ali browser, IM, mobile Alipay and Mobile Taobao services. It is said that Alibaba mobile operating system will offer “cloud-based” service such as applications that users can access over the Web rather than download to their devices.

Since last year there had been rumors that Tencent was considering to develop its own mobile OS and Qphone, but Tencent did not confirm it yet. Last month Tencent released “Tianyi QQ smart phone”to target college students. These phones install Android OS and integrate Tencent services such as QQ weibo, QQ browser and Qzone.

Observers believe that these major Internet service providers will bring better smart phones for 1000 yuan (US$154) to Chinese users.