Billion-dollar Didi deal seen as sign Apple's automotive interests go beyond just Maps

Posted:
in General Discussion
As rumors of an "Apple Car" continue to grow, the company's $1 billion investment in Chinese ride hailing company Didi Chuxing has further driven speculation that Apple's interest in the automotive market goes far beyond improving its Maps service.


Illustration via China Business News.


The Didi investment could actually prove to be a key element in Apple's wider automotive strategy, according to Jack Kent, mobile director at IHS Technology. He believes Didi's taxi service could provide a number of strategic opportunities for Apple to expand its focus into more lucrative services.

In a surprise announcement, Apple revealed on Thursday that it used $1 billion from its massive cash hoard to invest in Didi Chuxing. It's the single-largest investment that Didi has received to date.

Apple has been coy about its intentions with Didi, as Chief Executive Tim Cook simply said his company hopes to gain insight on the Chinese market through Didi's expertise. But with Apple widely believed to be working on its own automotive initiative, dubbed "Project Titan," the alignment with Didi has inspired some, including IHS's Kent, to see potential well beyond just a regional investment opportunity.

For example, unlike many traditional mobile applications, taxi apps are able to quickly establish a billing relationship with their audience, since they require immediate payment. The apps can then use this billing information as a platform to deliver a range of other services, such as deliveries and wider mobile commerce services.

These apps can also capture other valuable information about users in the process of ferrying them about.




In a research note published Friday, Kent said that the Didi deal represents a strategic shift in Apple's approach to companies in which it has an interest.

Traditionally, Apple usually acquires such companies outright and integrates them into its existing product strategy, or into new products. For example, Apple acquired Beats for $3 billion prior to launching its Apple Music streaming service. That stands in contrast to competitors such as Google, who have actively invested in other ventures rather than acquiring them outright.

Apple's decision in this case to invest on such an enormous scale highlights the strategic importance of the Chinese market to Apple. Not only is the market of over 1 billion people enormous, but it has recently proven problematic for Apple as the Chinese government abruptly shuttered two of its services last month --?iTunes Movies and iBooks. Kent believes the spat with the Chinese government shows that Apple has a distinct need for local knowledge and local partnerships, such as the one with Didi, to further its position in China.

Apple's investment also comes against the backdrop of Apple's recent quarterly results that showed its iPhone business to be slowing. Sales were down 26 percent in China last quarter, though Cook has said he remains optimistic on the market.

Comments

  • Reply 1 of 19
    TempletonTempleton Posts: 84member
    Agree
  • Reply 2 of 19
    irelandireland Posts: 17,549member
    Truth is beyond Cook's comments it's nigh impossible to know what this investment is about exactly. The dolts over on MR are up to their usual tricks demonstrating they know little about a lot.
    edited May 2016 lostkiwicali
  • Reply 3 of 19
    palegolaspalegolas Posts: 1,274member
     This is like the only thing that I ever hoped for when it comes to Apple moving into the car industry.  Tesla isn't doing anything for the environment. Sure, their cars runs on batteries,  but they're only pushing out even more single driver cars on the roads, pushing the already exploding level of traffic on the infrastructure.  Traffic is only getting worse, and it has to be solved. 

    If Apple's vision for cars in the future is to solve this, which I believe it is, then I applaud them for being bold and not being selfish, or clinging to the traditional role that the car has had for so long. Instead they seem to approach the mindset that the car should not have to be owned, but rather hopped on, hopped off when needed, like in Didi/ Uber.

    Only a very non selfish organisation could embark on such a project.
    edited May 2016 delreyjonesbaconstanglatifbpSoli
  • Reply 4 of 19
    This is an extremely well thought out investment. It aligns with Apple's long-term commitment to all things green.  If one wants to reduce pollution due to emerging middle class in china who has a love affair with cars, then the best thing to do is reduce, not the number of cars (which is aspirational) but its daily use. China is a better market for a car on demand than the US.  Other things are also important in terms of use of apple pay and car-play etc. but in the long run, this will benefit the environment in China which everybody should rejoice.
    calidelreyjonesbaconstanglatifbpbadmonk
  • Reply 5 of 19
    baconstangbaconstang Posts: 540member
    I don't think there's going to be an iCar, at least not at first.   More like AppleTransit.
    Think Lyft meets Tinder.  
  • Reply 6 of 19
    blastdoorblastdoor Posts: 1,894member
    Even in the United States, car ownership is going to obsolete by the end of the 21st century. 

    But in China this is going to happen faster, by environmental and economic necessity. 

    I am convinced that Apple knows this and is focusing on that future market, not the one that exists now. Skate to where the puck will be. For Apple, that means transportation as a service, requested by an iPhone, and delivered with high, consistent quality, safety, and respect for local laws and regulations. In other words, a non-shady version of Uber. 
    baconstangcalibadmonk
  • Reply 7 of 19
    zoetmbzoetmb Posts: 2,423member
    palegolas said:
     This is like the only thing that I ever hoped for when it comes to Apple moving into the car industry.  Tesla isn't doing anything for the environment. Sure, their cars runs on batteries,  but they're only pushing out even more single driver cars on the roads, pushing the already exploding level of traffic on the infrastructure.  Traffic is only getting worse, and it has to be solved. 

    If Apple's vision for cars in the future is to solve this, which I believe it is, then I applaud them for being bold and not being selfish, or clinging to the traditional role that the car has had for so long. Instead they seem to approach the mindset that the car should not have to be owned, but rather hopped on, hopped off when needed, like in Didi/ Uber.

    Only a very non selfish organisation could embark on such a project.
    There's no evidence that Tesla drivers wouldn't be driving if they didn't buy a Tesla.   The only way traffic gets solved is with a massive investment in mass public transportation:  trains, light rail, subways, monorails, modern trolleys, trams, buses, etc. and even then it would be tough because unlike Europe and other countries, Americans don't like using mass transit and our local, State and Federal governments are never going to spend the money to create a modern and decent mass transit system in the cities of this country.   Congress barely wants to fund Amtrak.    I don't see Apple (or anyone else for that matter) working on any of that. 

    If, as rumored, Apple is going to build a car for individuals, as is rumored, then they're most certainly not trying to solve this.   They may be trying to solve building a better car that's better for the environment, but that's not the same thing.  

    If they're going to build a modern taxicab, then maybe they'll help a little (but not much).   Maybe I lack vision, but I can't see how they'll ever make back a $billion investment. I know China has a huge population, but even at 70 Yuan per ride (which most Chinese couldn't afford) and assuming that the driver gets half, Didi gets a quarter and Apple getting a quarter, we're talking about 400 million rides to break even if Apple had no other expenses.    I also don't see how getting billing information from riders who don't pay cash gets Apple anything that they wouldn't have gotten anyway by consumers ordering via iTunes, etc. 

    China has been building mass transit systems everywhere and it's really remarkable how fast they've gotten built.   But they're still doomed unless they get the masses back onto bicycles.   

    As an aside, in the U.S., not only do I see Americans unwilling to give up driving, I have severe doubts about the willingness of Americans (especially macho men) to give up control of driving to automated self-driving cars.   About the only place in the U.S. where the masses use mass transit is in New York City, which has seen subway usage climb back to 1940s levels.   Obviously there are systems in Boston, Chicago, San Francisco, Washington and Los Angeles and smaller systems in a few other places, but they have much lower ridership.

    According to the NY MTA:
    In 2015, average weekday subway ridership was 5.7 million, the highest since 1948. Annual ridership was 1.763 billion, also the highest since 1948.

    And that doesn't include buses, cabs or commuter trains.

    brucemc
  • Reply 8 of 19
    SpamSandwichSpamSandwich Posts: 30,862member
    palegolas said:
     This is like the only thing that I ever hoped for when it comes to Apple moving into the car industry.  Tesla isn't doing anything for the environment. Sure, their cars runs on batteries,  but they're only pushing out even more single driver cars on the roads, pushing the already exploding level of traffic on the infrastructure.  Traffic is only getting worse, and it has to be solved. 

    If Apple's vision for cars in the future is to solve this, which I believe it is, then I applaud them for being bold and not being selfish, or clinging to the traditional role that the car has had for so long. Instead they seem to approach the mindset that the car should not have to be owned, but rather hopped on, hopped off when needed, like in Didi/ Uber.

    Only a very non selfish organisation could embark on such a project.
    Speaking strictly for myself, I have no interest in ride-sharing services. Cabs are bad enough, with their odd smells.
    Soli
  • Reply 9 of 19
    SpamSandwichSpamSandwich Posts: 30,862member

    I don't think there's going to be an iCar, at least not at first.   More like AppleTransit.
    Think Lyft meets Tinder.  
    Date-A-Car?
    baconstangcali
  • Reply 10 of 19
    techlovertechlover Posts: 879member
    Sometimes an investment is just an investment.

    Apple is sitting on an enormous pile of cash. There is no reason why they shouldn't try to make a better return on that cash rather than letting just sit there in a pile.
  • Reply 11 of 19
    sockrolidsockrolid Posts: 2,788member
    Off topic: I had lunch in Mountain View today, and I saw a Google self-driving SUV.
    It was trying to make a right turn from Dana onto Castro northbound against a red light.
    Completely stopped halfway through the turn, even though nobody was crossing the intersection.
    Stayed stuck until long after the light had turned green, partially blocking me and other traffic on Dana.

    P.S. Yeah, that was me in the black Daring Fireball t-shirt.
    edited May 2016
  • Reply 12 of 19
    SpamSandwichSpamSandwich Posts: 30,862member
    sockrolid said:
    Off topic: I had lunch in Mountain View today, and I saw a Google self-driving SUV.
    It was trying to make a right turn from Dana onto Castro northbound against a red light.
    Completely stopped halfway through the turn, even though nobody was crossing the intersection.
    Stayed stuck until long after the light had turned green, partially blocking me and other traffic on Dana.

    P.S. Yeah, that was me in the black Daring Fireball t-shirt.
    Did you just "out" yourself? Are you John Gruber? ;)
  • Reply 13 of 19
    calicali Posts: 3,495member
    sockrolid said:
    Off topic: I had lunch in Mountain View today, and I saw a Google self-driving SUV.
    It was trying to make a right turn from Dana onto Castro northbound against a red light.
    Completely stopped halfway through the turn, even though nobody was crossing the intersection.
    Stayed stuck until long after the light had turned green, partially blocking me and other traffic on Dana.

    P.S. Yeah, that was me in the black Daring Fireball t-shirt.
    Those things are out in the wild?! Without drivers??

    This sounds like a horrible idea. 
    baconstang
  • Reply 14 of 19
    applesauce007applesauce007 Posts: 1,604member
    Well, Didi Chuxing is not restricted to China only.
    Expect to see them in the U.S. and other countries soon.

    With Apple future technology, they will rule 

    Go Didi, go, go, go!

    latifbp
  • Reply 15 of 19
    nolamacguynolamacguy Posts: 4,758member
    palegolas said:
     This is like the only thing that I ever hoped for when it comes to Apple moving into the car industry.  Tesla isn't doing anything for the environment. Sure, their cars runs on batteries,  but they're only pushing out even more single driver cars on the roads, pushing the already exploding level of traffic on the infrastructure.  Traffic is only getting worse, and it has to be solved. 

    If Apple's vision for cars in the future is to solve this, which I believe it is, then I applaud them for being bold and not being selfish, or clinging to the traditional role that the car has had for so long. Instead they seem to approach the mindset that the car should not have to be owned, but rather hopped on, hopped off when needed, like in Didi/ Uber.

    Only a very non selfish organisation could embark on such a project.
    Speaking strictly for myself, I have no interest in ride-sharing services. Cabs are bad enough, with their odd smells.
    ubers are all new cars. what smells?
  • Reply 16 of 19
    Rayz2016Rayz2016 Posts: 4,556member
    Speaking strictly for myself, I have no interest in ride-sharing services. Cabs are bad enough, with their odd smells.
    ubers are all new cars. what smells?
    A friend of mine moved to London many years ago.

    He arrived at his new flat for the first time and couldn't find a parking space. So, he drove around for a bit…

    Half an hour later, he got back to his new flat. He had to park his car so far away that he had to take the underground back to his place.

    About a year later, I think, he sold his car and signed on with a car share scheme. He never looked back. 

    No insurance.
    No road tax.
    No depreciation
    No servicing bills.

    The car is always pristine when he takes charge of it, and he's never had one break down.

    Now, I'm not sure if Apple's investment is really an investment, or just the cost of doing business in China, but I think it's clear they're working on some sort of car, and I think it will be a service rather than selling to end customers.

    Dealerships won't allow the AppleCar on their forecourts, which means they'll have to open their own dealerships.

    Apple is also aware of how people spend money: The more expensive the item then the longer people will go before replacing it.  Apple would not see upgrades for ten to fifteen years.

    Didn't someone say that if it appreciates in value then buy it; if it depreciates then rent it?
  • Reply 17 of 19
    davendaven Posts: 506member
    I think it may be about Apple showing The Chinese government that Apple is a good partner and to let them restart the iTunes Store in China.
  • Reply 18 of 19
    brucemcbrucemc Posts: 1,526member
    techlover said:
    Sometimes an investment is just an investment.

    Apple is sitting on an enormous pile of cash. There is no reason why they shouldn't try to make a better return on that cash rather than letting just sit there in a pile.
    For certain Apple must believe it is a good investment. They wouldn't put a $B in without believing that. I am sure there are other benefits as well like potential CarPlay and Apple Pay angles. And maybe trying to have positive image with the Chinese government 
  • Reply 19 of 19
    jmey267jmey267 Posts: 49member
    What if this is nothing about an apple car effort but more of a huge ApplePay effort? This company has I think 11 million rides a day if even 1/3 of these users paid with ApplePay that is huge income very quickly. So maybe it is about easy ApplePay integration and payment and of course some road data with it.
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