Apple invested a billion in Didi Chuxing, the oft-called Chinese Uber. That's a nice pot of cash, so everyone's chattering about why Tim's crew sunk money into a glorified taxi service.
[Developing story. Updated 9:33 am PT with more comment. Edited to fix factual error 5:45 am PT]
A billion here. A billion there. Sooner or later, you're talking serious money.
In IT Blogwatch, bloggers surge and wave. Your humble blogwatcher curated these bloggy bits for your entertainment.
What’s the craic? Julia Love embraces the story—Apple invests $1 billion in Chinese ride-hailing service:
Apple...invested $1 billion in Chinese ride-hailing service Didi Chuxing. ... Tim Cook said [it] would help the company...understand the...Chinese market.
Apple is trying to reinvigorate sales in China. ... Cook is traveling to the country this month. ... "We are making the investment for a number of strategic reasons,"...he said.
Didi Chuxing [said] the funding [is] the single largest investment it has ever received. ... Analysts say the deal offers a glimpse of how Apple may diversify its business as sales of the iPhone level off.
Didi whatnow? Chance Miller brands the company a Chinese Uber competitor:
Cook has long touted the potential of China’s economy. ... The Apple CEO noted that the investment “reflects...our continued confidence in the long term in China’s economy.”
Didi Chuxing is referred to as “China’s Uber” by many. [It] completes more than 11 million rides a day [with] 87 percent of the private ride-hailing market in China.
But what of Cook's "number of strategic reasons"? Carly Page turns to speculation: [You're fired -Ed.]
[It] has fuelled speculation that [Apple] is revving up its own electric car plans. [But] Apple has run into some trouble in China of late...as part of a crackdown on...foreign...online services...that compete directly with...Chinese companies. ... The investment could also see Apple Pay...supported in Didi's cab-hailing app.
Is it that "weird"? Duncan Riley thinks so—Apple unexpectedly invests $1b:
[It] can best be described as weird...given Tim Cook’s explanation...about wanting to get to know China better. [But] if Apple comes to market with an...electric vehicle...what better testing platform than the world’s largest ridesharing service?
Hang on. Since when does Apple do this sort of PR? John Gruber raconts—on the Twitters:
The conspicuousness of the Didi investment...is more telling than the $1B sum. Usual move: make the investment in secret.
[Apple made] $10B in profit last quarter, so [it's] like roughly “one week’s salary” to us. ... But assuming they can use their overseas cash for this, it’s even cheaper.
Update: More reactions flooding in. This Anonymous Coward isn't impressed:
Tim Cook thinks this is the way to offer a bribe to the Chinese to buy his products. Sadly, he is wrong and has wasted his company's money. ... The investment will all be gone in a year.
Investing in China considered risky? Another Anonymous Coward suggests a better plan:
Here's an idea, invest in your own ********* company. ... iTunes is a bloated pile of steaming ****. The iTunes Music Store and App Store are rapidly becoming indecipherable piles of garbage that are nearly impossible to sort through. ... The hardware almost all universally sucks right now...due to "thinner" and "lighter" systems that can't keep up with the thermal load. ... Mac OS X is...rotting away from the inside out, HFS hasn't been touched in decades and every year all we get are new half baked features that **** up your workflow and then...get forgotten about for the next release. iOS has slowly been getting more and more convoluted now that we don't have things like graphically obvious buttons and it's apparently OK to hide useful things behind three layers of menu stuffed behind a burger icon somewhere.
OK, but what about a more nuanced view? Heed the words of fuzzyfuzzyfungus:
I wonder how much of this is about attempting to 'break into the Chinese market' and how much of it is simply the fact that the time to get in 'on the ground floor' with Uber is long past, so Apple couldn't realistically expect nearly as much growth or control-over-future-direction-of-the-company if they'd made an equivalent purchase in Uber or Lyft? Either of those two might...still be a perfectly viable buy if one is merely looking to make an adequate return on investment; but presumably Apple wants either some sort of strategic gain or the possibility of substantial return on investment if the bet pays off.
After all, Apple's "cash" assets aren't really just sitting in a Scrooge McDuck money vault somewhere, at that size "cash" means "reasonably conservative and liquid investments that can be cashed out as needed", so Apple's default investment strategy for their spare cash is, already, 'aim for reasonable returns', so 'aim for reasonable returns; but with a massive decrease in portfolio diversity!' would be an idiotic plan.
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