A lot of people will be talking about news this morning that Didi is to buy Uber China in a deal valued at around $35 billion, a deal that puts Apple firmly in the ride-sharing market.
Back seat drivers
What’s setting speculation free is Apple’s recent billion-dollar investment in Didi and its widely reported Apple Car plans.
Discussing the deal during last week’s financial call, Apple CEO, Tim Cook said: “We are making the investment for a number of strategic reasons, including a chance to learn about certain segments of the China market. Of course, we believe it will deliver a strong return for our invested capital over time as well.”
Terms of the deal
Here is what we know about the deal according to what’s crossing newswires this morning:
“Under the agreement:
Uber China will maintain independent branding and business operations to ensure stabilityand continuity of service for passengers and drivers;
Didi Chuxing will integrate the managerial and technological experience and expertise of the two teams, to meet China’s ever richer transportation demands with more value-added solutions;
Didi Chuxing will work with regulators, peers and stakeholder groups to continue educating the market to build a healthy environment in support of the growth of China’s mobile internet industry and the nation’s economic development program; and
Didi Chuxing will continue to work with global partners in connecting local resources to create the best possible cross-border ridesharing experience for their users.” (Press Release)
- Uber gets 5.89 percent stake in the newly merged entity.
- Uber also gets preferential equity around 17.7 percent Existing Uber China investors get 2.3 percent of the new business.
- Bloomberg claims Didi will invest $1 billion in Uber globally.
- Cheng Wei, founder and chairman of Didi Chuxing, joins Uber’s board,
- Uber CEO Travis Kalanick joins Didi’s board.
Uber’s Kalanick told staff this morning that the deal was about helping make services profitable.
What is also interesting is Didi’s existing relationships with other Uber competitors including Lyft in the US, India's Ola and Southeast Asia's Grab.
What that means is that for the cost of its billion-dollar Didi investment, Apple now has a stake in Uber and relationships with ride hailing services worldwide.
That’s a pretty useful position to be in when the company appears to be heavily invested in Apple Car.
It’s not just cars
Why is Apple so interested in the cars? Well, other than the potential to put connected mobile intelligence into vehicles, and to provide services to car users, Tim Cook’s “people” are likely to be very interested in the much wider opportunity of digital transformation in the vehicle and associated industries. These technologies aren’t confined in impact to the cars you drive or hail; haulage, logistics, agriculture, farm machinery, shipping even aviation are all subject to similar disruptive forces. Apple wants to be a part of all of this change.
I’m not whistling in the dark in saying this. Uber’s Kalanick this morning hinted he has a similar future vision, saying the deal would free up Uber’s resources for “bold initiatives focused on the future of cities -- from self-driving technology to the future of food and logistics."
That’s the kind of thing that’s at stake.
iOS in the infrastructure
Within such a wide game it evidently makes a great deal of sense for Apple to focus its connected vehicle efforts on a much wider market than the one for private vehicles. Why wouldn’t the company want its carOS software to be providing the intelligence for every kind of road transport, from cars to buses, trucks, heavy machinery, even military applications? (Frankly I think its ambitions go much further).
There’s no way the company can create vehicles for all these verticals, so creating and licensing the software to other firms may well be the most logical approach.
The opportunity more than compensates for the relatively minor hassle of adopting a fresh approach to Apple’s business.
Ultimately if a huge number of vehicles are already running carOS, Apple can still make good money creating cutting edge vehicles for the premium consumers it works so hard to please. Doing so means it would benefit from both scale of use and design chutzpah.
Localization counts
How Apple’s plans may benefit from its association with the new breed of ride sharing services may not be immediately obvious, but I can imagine that being able to call on expert country-by-country knowledge concerning local laws, regulations and customs when it comes to driving can only benefit the company in its efforts to expand into different markets. Being able to test and deploy carOS systems in the real world will also help build awareness and widen proliferation.
One thing is for sure. We now know Uber is looking at “self-driving technology to the future of food and logistics." Following the Didi deal, Apple now has an investment in exactly the same things.
A single move that puts Apple at the very heart of the digital transformation of everything.
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