Didi Chuxing president hints at tech link for Apple's $1 billion investment

AppleInsider · May 18, 2016 2:12PM

In a TV interview, Didi Chuxing president Jean Liu dropped more hints about the possible reasons for Apple's $1 billion investment, suggesting a technological connection.

"We actually share a huge overlap in customer base," Liu told CNBC. "Our driver base, our passengers, they use Apple and iPhone a lot, iPad, I think it's very intuitive."

The executive pointed out that the potential scale of the Chinese ridesharing market is much larger than the U.S., claiming her company has only a 1 percent penetration of about 1.1 billion daily Chinese commutes. The number of rides Didi provides in Beijing every day is five or six times the entire New York ridesharing market, she said. Along those lines, Liu suggested that technology is a solution.

"All we are focused [on] right now is number one, on technology," she said, "how we can match the supply and demand, i.e. the vehicles, the drivers, with the passengers."

Apple could be hoping to fill the gap, though there are number potential ways this might happen. On a basic level Apple might offer to integrate its devices, software, and/or services, such as Apple Maps. The company is also believed to be developing an electric car, however, which could become self-driving. Selling such vehicles into the Didi fleet might be lucrative.

When Apple's investment was first revealed, Apple CEO Tim Cook said only that it was made "for a number of strategic reasons," such as "a chance to learn more about certain segments of the China market." He later added that Didi had an "environmental" objective, reducing pollution by making more efficient use of cars.

cali · May 18, 2016 2:25PM

They clicked. This is something I noticed about Apple, they do business with people they believe in not just technology they believe in. Notice they went on a "speed date", saw the same vision and believed in one another.

This may seem obvious to some but I remember seeing a video about the history of Nokia and their own employees had a lack of confidence in the company when Microsoft acquired them for 7 billion, something Apple would have avoided.

This investment has HUGE marketing and innovation potential and like the president said, they're just getting started. 5x the New York rideshare market is huge and something even Uber didn't see coming.

Oh but "Apple isn't doing anything", they "aren't innovating anymore" because they don't tell us what they're up to!!!11

Templeton · May 18, 2016 2:46PM

The Chinese are good at taking an idea and growing the technology well beyond the original and quickly. This is a good example, 1.1 billion riders? Also no problems with employee/ independant contractor issues. No Class actions in China.

jackansi · May 18, 2016 2:58PM

Templeton said:

The Chinese are good at taking an idea and growing the technology well beyond the original and quickly. This is a good example, 1.1 billion riders? Also no problems with employee/ independant contractor issues. No Class actions in China.

Also makes more sense in China than the US, being as cars are a bit rarer there (per-capita).

I wouldn't say Apple got in on the ground floor, but they definitely got in to an express car on this one, if the Chinese economy holds.

foggyhill · May 18, 2016 3:01PM

jackansi said:

Templeton said:

The Chinese are good at taking an idea and growing the technology well beyond the original and quickly. This is a good example, 1.1 billion riders? Also no problems with employee/ independant contractor issues. No Class actions in China.

Also makes more sense in China than the US, being as cars are a bit rarer there (per-capita).

I wouldn't say Apple got in on the ground floor, but they definitely got in to an express car on this one.

Cities are also much more congested, and parking would be expensive even if you could afford a car; basically the ideal spot for not owning your own car.

jackansi · May 18, 2016 3:08PM

foggyhill said:

jackansi said:

Also makes more sense in China than the US, being as cars are a bit rarer there (per-capita).

I wouldn't say Apple got in on the ground floor, but they definitely got in to an express car on this one.

Cities are also much more congested, and parking would be expensive even if you could afford a car; basically the ideal spot for not owning your own car.

All reasons cars are rarer. Few cars + more "need" to get around = great opportunity.

paxman · May 18, 2016 3:15PM

foggyhill said:

jackansi said:

Also makes more sense in China than the US, being as cars are a bit rarer there (per-capita).

I wouldn't say Apple got in on the ground floor, but they definitely got in to an express car on this one.

Cities are also much more congested, and parking would be expensive even if you could afford a car; basically the ideal spot for not owning your own car.

This is the same for many metropolitan centres, New York included. Beijing would definitely be on that list. Owning a car is ridiculously expensive and to own one if you live centrally in a large city often makes little economical sense. The money you spend would give you plenty rental and taxi rides with much change to spare for a lot of people. Car sharing in the form of autonomous electric cars is the way of the future. I am not sure the car manufacturers like the idea from a practical standpoint it makes good sense. I can imagine even public transport as we know it will be hugely affected by the autonomous car - why invest in city rail and bus services when pods can form 'trains' as and when required? The next 25 years will be very interesting

paxman · May 18, 2016 3:16PM

cali said:

They clicked. This is something I noticed about Apple, they do business with people they believe in not just technology they believe in. Notice they went on a "speed date", saw the same vision and believed in one another.

This may seem obvious to some but I remember seeing a video about the history of Nokia and their own employees had a lack of confidence in the company when Microsoft acquired them for 7 billion, something Apple would have avoided.

This investment has HUGE marketing and innovation potential and like the president said, they're just getting started. 5x the New York rideshare market is huge and something even Uber didn't see coming.

Oh but "Apple isn't doing anything", they "aren't innovating anymore" because they don't tell us what they're up to!!!11

I like this investment and I like the suggested potential. I know little about the company but the way Jean Liu speaks about it it seems to challenge some typical (my own, I guess) pre-conceptions about Chinese companies and how they are run. For the same reason it is interesting that a woman is the president. No reason it should not be so, but you know, pre-conceptions again. Oh, and I like her watch.

zoetmb · May 18, 2016 3:26PM

The entire population of China is 1.36 billion, so it's not 1.1 billion commutes per day even if one is counting two commutes per person per day. 40% of China's population is not going to use such a service. There are 25 million people in Shanghai, 21 million people in Beijing and eight other cities where the "urban area" population is greater than 10 million. But most people will use the extensive public transportation systems in the cities. While a ride system might get some cars off the road, I doubt it's going to be enough to substantially reduce pollution in the biggest cities and it's only practical for those who have relatively high incomes. In fact, unless the number of drivers is controlled, it could put more cars on the road. I'd say the market is probably those with the top 20% of incomes -- closer to 30 million people - 60 million commutes a day. That's still substantial obviously.

Furthermore, I think Apple's investment is not really about cars or technology or creating a market for whatever car Apple produces, if indeed they do so. IMO, I think this is probably mostly political. It's about making a big investment in a Chinese company in order to get the Chinese government off of Apple's back using cash they don't want to bring back to the U.S. anyway because of the tax implications.

robin huber · May 18, 2016 3:30PM

How long before Apple is bought by China?

boeyc15 · May 18, 2016 3:51PM

zoetmb said:

The entire population of China is 1.36 billion, so it's not 1.1 billion commutes per day even if one is counting two commutes per person per day. 40% of China's population is not going to use such a service. There are 25 million people in Shanghai, 21 million people in Beijing and eight other cities where the "urban area" population is greater than 10 million. But most people will use the extensive public transportation systems in the cities. While a ride system might get some cars off the road, I doubt it's going to be enough to substantially reduce pollution in the biggest cities and it's only practical for those who have relatively high incomes. In fact, unless the number of drivers is controlled, it could put more cars on the road. I'd say the market is probably those with the top 20% of incomes -- closer to 30 million people - 60 million commutes a day. That's still substantial obviously.

Furthermore, I think Apple's investment is not really about cars or technology or creating a market for whatever car Apple produces, if indeed they do so. IMO, I think this is probably mostly political. It's about making a big investment in a Chinese company in order to get the Chinese government off of Apple's back using cash they don't want to bring back to the U.S. anyway because of the tax implications.

I tend agree. However--- Im a bit confused, is this a true 'ride-share' or is this a Uber type thing. My Negative Nellie view of 'Uber et el'--- all they do (in theory) is compete on price with Taxi services and possible convenience. Still a 'car' on the road. If gasoline, still polluting.

IMO true 'ride-sharing' - Hey Im going to the Mall, any one want to come along and share costs?... that would be different!

ireland · May 18, 2016 4:07PM

I think Apple are interested in learning about the ride sharing market, not necessarily because they wish to enter it (though they are certainly working on a car) but rather because they wish to understand it.

And who knows, perhaps provide an out of the box software solution for iPhone owners as part of some future major OS update: a default iOS app and service capable of ordering cars, billing customers and paying drivers.

Potentially selling cars into the Didi fleet is the wrong way to look at this investment. I see it as a potential software partnership and areas of huge amounts of invaluable market information.

dick applebaum · May 18, 2016 4:21PM

AppleInsider said:

In a TV interview, Didi Chuxing president Jean Liu dropped more hints about the possible reasons for Apple's $1 billion investment, suggesting a technological connection.

"All we are focused [on] right now is number one, on technology," she said, "how we can match the supply and demand, i.e. the vehicles, the drivers, with the passengers."

Sounds to me that the technology they are focused on is a service: timely matching of customers to available rides at scale.

Here's the current scale:

300,000,000 users
11,000,000 trips/day
400 cities
Beijing 5x NYC

Potential 1,100,000,000 trips/day.

Looking at this from a database/transaction-processing perspective:

Each trip consists of 3* transactions:

schedule
pickup
deliver

* there are some number of failed (cancels or no-show) trips that consist of a schedule and a cancel transaction. These are not included in the analysis.

So, that equals 33,000,000 trip transactions per day.

Using the 80/20 rule**: a peak of 26,400,000 trip transactions in 4.8 hours == 5,500,000 trip transactions/hour == 1,528 trip transactions per second.

** I am not too sure if the 80/20 rule applies ... I understand that China, with few exceptions, has a single time zone -- so I don't understand peak commute hours in China.

If we look at the potential and scale that by 100 it would be 152,800 trip transactions per second.

Where can we find a database capable of massive size and of processing that many transactions per second???

Well, I'll tell you where: Apple!

Last year Apple acquired FoundationDB -- a performant, scalable, transactional distributed NoSQL database.

The FoundationDB site was taken down after the acquisition, but some information remains on the web, like this:

FoundationDB: 14.4 Million Write Transactions per Second

Image: http://thenewstack.io/wp-content/uploads/2015/01/foundationDB-transactional-writes-per-second.png

http://thenewstack.io/databases-high-volume-transactions-scale-part-two/

ireland · May 18, 2016 4:50PM

cali said:

They clicked. This is something I noticed about Apple, they do business with people they believe in not just technology they believe in. Notice they went on a "speed date", saw the same vision and believed in one another.

This may seem obvious to some but I remember seeing a video about the history of Nokia and their own employees had a lack of confidence in the company when Microsoft acquired them for 7 billion, something Apple would have avoided.

It's common knowledge that you should invest in people not ideas. Fund the right group of people are they'll change things. Fund a great idea with the wrong people and there's a good risk there. Dragon's Den, Shark Tank, they want to invest in the person the whole time.

dick applebaum · May 18, 2016 4:56PM

zoetmb said:

The entire population of China is 1.36 billion, so it's not 1.1 billion commutes per day even if one is counting two commutes per person per day. 40% of China's population is not going to use such a service. There are 25 million people in Shanghai, 21 million people in Beijing and eight other cities where the "urban area" population is greater than 10 million. But most people will use the extensive public transportation systems in the cities. While a ride system might get some cars off the road, I doubt it's going to be enough to substantially reduce pollution in the biggest cities and it's only practical for those who have relatively high incomes. In fact, unless the number of drivers is controlled, it could put more cars on the road. I'd say the market is probably those with the top 20% of incomes -- closer to 30 million people - 60 million commutes a day. That's still substantial obviously.

Furthermore, I think Apple's investment is not really about cars or technology or creating a market for whatever car Apple produces, if indeed they do so. IMO, I think this is probably mostly political. It's about making a big investment in a Chinese company in order to get the Chinese government off of Apple's back using cash they don't want to bring back to the U.S. anyway because of the tax implications.

According to the video:

Here's the current scale:

300,000,000 users
11,000,000 trips/day
400 cities
Beijing 5x NYC

Potential 1,100,000,000 trips/day.

foggyhill · May 18, 2016 6:48PM

zoetmb said:

The entire population of China is 1.36 billion, so it's not 1.1 billion commutes per day even if one is counting two commutes per person per day. 40% of China's population is not going to use such a service. There are 25 million people in Shanghai, 21 million people in Beijing and eight other cities where the "urban area" population is greater than 10 million. But most people will use the extensive public transportation systems in the cities. While a ride system might get some cars off the road, I doubt it's going to be enough to substantially reduce pollution in the biggest cities and it's only practical for those who have relatively high incomes. In fact, unless the number of drivers is controlled, it could put more cars on the road. I'd say the market is probably those with the top 20% of incomes -- closer to 30 million people - 60 million commutes a day. That's still substantial obviously.

Furthermore, I think Apple's investment is not really about cars or technology or creating a market for whatever car Apple produces, if indeed they do so. IMO, I think this is probably mostly political. It's about making a big investment in a Chinese company in order to get the Chinese government off of Apple's back using cash they don't want to bring back to the U.S. anyway because of the tax implications.

Apple doesn't need to serve everyone, just like the Iphone is not for everyone. If they get 50%+ of the profits in public transport, they're quiet Happy to only transport 10% of people.

hjmnl · May 19, 2016 6:42PM

foggyhill said:

zoetmb said:

The entire population of China is 1.36 billion, so it's not 1.1 billion commutes per day even if one is counting two commutes per person per day. 40% of China's population is not going to use such a service. There are 25 million people in Shanghai, 21 million people in Beijing and eight other cities where the "urban area" population is greater than 10 million. But most people will use the extensive public transportation systems in the cities. While a ride system might get some cars off the road, I doubt it's going to be enough to substantially reduce pollution in the biggest cities and it's only practical for those who have relatively high incomes. In fact, unless the number of drivers is controlled, it could put more cars on the road. I'd say the market is probably those with the top 20% of incomes -- closer to 30 million people - 60 million commutes a day. That's still substantial obviously.

Furthermore, I think Apple's investment is not really about cars or technology or creating a market for whatever car Apple produces, if indeed they do so. IMO, I think this is probably mostly political. It's about making a big investment in a Chinese company in order to get the Chinese government off of Apple's back using cash they don't want to bring back to the U.S. anyway because of the tax implications.

Apple doesn't need to serve everyone, just like the Iphone is not for everyone. If they get 50%+ of the profits in public transport, they're quiet Happy to only transport 10% of people.

I think foggyhill and I have a very different view on Apple. I want to see Apple make premium (the best) products for a premium prize. Seems like foggyhill is only concerned about how much profit Apple is making despite its mediocre products at the moment. If Apple doesn't invest their profits (= money from their customers) to be the best, lots of people (myself included) will be disappointed in time.

Didi Chuxing president hints at tech link for Apple's $1 billion investment

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