UPDATE: ZTE to Launch Smartphones Using Mozilla Mobile OS Next Year

--A ZTE executive says the company plans to launch smartphones using a mobile operating system it developed with Mozilla

--ZTE also plans to release smartphones using Microsoft's Windows Phone operating system at the end of this year or early next year

--ZTE's plans come after Acer's decision to postpone the launch of a smartphone using Alibaba Group Holding's mobile operating system

(Adds Alibaba's mobile OS in paragraphs 5 and 6, smartphone OS data in paragraph 7, ZTE's market share in paragraph 8)

By Paul Mozur and Juro Osawa

BEIJING--Chinese telecommunications equipment maker ZTE Corp. (0763.HK) plans to launch smartphones using a mobile operating system it developed with Mozilla, the U.S. software company behind the Firefox web browser, in the first quarter of next year.

The move is the latest indication that handset makers are looking beyond Google Inc.'s (GOOG) dominant Android mobile operating system as they try to diversify the software platforms for their smartphones and other mobile devices. While Apple Inc.'s (AAPL) iPhone uses its own iOS software, most other smartphones currently sold around the world are powered by Android.

ZTE Executive Vice President He Shiyou said at a press briefing Wednesday that the company, one of China's largest mobile handset makers, will also launch smartphones using Microsoft Corp.'s (MSFT) Windows Phone 8 operating system at the end of this year or early next year.

Along with Microsoft's Windows Phone 8, the new mobile operating system from Mozilla and ZTE will fuel discussions world-wide about possible alternatives to Android. Potential alternatives are drawing more attention as the technology industry is closely watching Apple's patent war against rival smartphone makers using the Google software.

ZTE's smartphone launch plans also come after Taiwanese personal computer maker Acer Inc. (2353.TW) last week postponed its release in China of a new smartphone using Alibaba Group Holding's Aliyun mobile operating system, after Google objected to the phone's launch.

Google said Alibaba's Aliyun "was derived from Android" yet it isn't compatible with Android. Acer, a handset maker that is part of the Android ecosystem, isn't allowed to ship non-compatible Android devices, Google said. Alibaba, China's biggest e-commerce company, strongly disagreed with Google's view, saying that some of Aliyun's key software components were developed by Alibaba and are different from those used in Android.

According to market research firm IDC, 68.1% of smartphones shipped worldwide in the second quarter used Android, while 16.9% were Apple products running on iOS. Microsoft's Windows Phone mobile operating system accounted for only 3.5%.

ZTE, whose main business is providing telecommunications infrastructure and equipment, entered the mobile handset business in 2002. ZTE accounted for 5.2% of all the smartphones shipped worldwide in the second quarter, up sharply from 1.8% a year earlier, according to IDC, ranking the company fifth after Samsung Electronics Co., Apple, Nokia Corp. and HTC Corp. of Taiwan.

Write to Paul Mozur at [e-mail] and Juro Osawa at [e-mail]

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