1. Integrate Apple Pay into Didi Chuxing apps, which is estimated to have 300MM users in China. Didi currently only accepts payment with Weixin(aka WeChat) Pay and Ali Pay (aka Ant Financial Services Group, owned by Alibaba Group).
2. Massive data points for developing Apple's self-driving technology. Didi operates in 400 Chinese cities with over 11 million rides per day, and accounts for 80% private car hailing market and 99% taxi hailing market.
3. And yes, investing into Chinese tech sector give them a better leverage in negotiations with the government and also like sbuccini said, association with other Didi's major investors.
2. Self-driving is not going to happen in China the way it happens in the US. The roads are full of pedestrians, e-bikes, people breaking any sort of nominal rule or law... it's too accident prone. Plus you have the extra challenges of the politically accuracy-challenged navigation systems. No, I don't think this reason floats.
3. Maybe partly. Locking down stable long term CNY income via a one time USD investment seems like it could even be seen as long term corporate tax planning.
Apple has at least $216B cash on hand as of 2016  and majority of them are held overseas. $1B strategic investment with all said benefits sound like a VERY GOOD deal.
> Self-driving is not going to happen in China the way it happens in the US. The roads are full of pedestrians, e-bikes, people breaking any sort of nominal rule or law... it's too accident prone.
Probably not for a long time, yes. But I would argue that's exactly why Didi's data is MORE valuable for autonomous driving modeling to be based off. As Elon famously said to George Hotz about his comma.ai demo, 99% of the self-driving is easy to do. The hard part is the 1% edge cases and billions and billions of data points for engineering validation. Apple has a very aggressive timeline for their self-driving EV, buying that massive amount data from a harsh environment serves that purpose REALLY REALLY well and it's an efficient use of capital resources to achieve their goal in time.
> Maybe partly.
And lastly, it's hard to argue a ban on Apple when Apple can say to the government that hey we've investing $1B to grow millions of driver jobs and the local tech economy. It's about jobs!
We are assuming Didi/China will allow Apple access to the data ...
Humans have the luxury of being able to charge into an uncontrolled intersection and trusting other drivers to make room. Sure 1% of the time it's going to cause a fender-bender, but that's just what you have to do in order to get through the intersection.
There's no way that taking chances like that would fly with a self-driving car. Even though the human passenger would have done the same thing, they're still going to feel like the car company owes them for "the car's mistake" when it's involved in a collision.
You can just as easily teach a computer to trust people to make way as you can teach it to assume people won't make way.
Perhaps Apple is thinking that this is the hard part. Nailing down the most difficult areas of self driving cars will both give them the market in China/India or other areas with similar traffic, and also leaving the "easy stuff" for last, which will only need to be supplemental.
SF is busy, has tourists, and asshole taxis, but is just a normal city.
Delhi has 6 lanes if fluid traffic that mixes like a stream, cows walking the wrong way, elephants, tuk tuks that have heard of this thing you call lanes and find it a silly idea, and pedestrians that show no fear and believe they are made of iron.
China can be very similar.
It's not even really comparable. Anywhere in the US you at least have lanes of traffic, people driving on the right side of the road, and don't have a gazillion 1930s-looking tricycle carts weaving in and out everywhere... Scariest part to me about China traffic, everyone covers up their seatbelts so you can't use them.
Regardless, a $1B is not a small chunk of change, even for Apple. Clearly, natural synergies could arise when Project Titan matures. But Apple tightly coupling itself with a rising player in the Chinese tech sector is a smart play (not to mention associating itself with other notable Didi investors like Alibaba). We've seen similar moves by Uber, who took a large investment from Baidu.
Interesting times ahead.
Tim Cook meets with Chinese government to smooth over relations and then immediately Apple announces a capital investment in China, what a major coincidence!
Same with most tech companies actually, just that Apple does very little R&D in China ATM, so investment it is.
Note that while tax reform has broad support from both parties, the exact details of those reforms are fairly divisive.
Outside of the financial sector, they're now one of the world's largest corporate carriers of debt at $69.3 billion. At the pace they're picking up debt, they'll hit $100+ billion in debt in two years, while their annual profit and stock price declines simultaneously (upsetting investors, increasing pressure for greater dividends). Given their position in the smartphone market is in no way guaranteed or a monopoly, it's an extremely dangerous position they're putting themselves into.
Apple would accept a 5% penalty on their pile of cash any day of the week to repatriate it. Their financial situation in the very near future will become such that they start to get threatened with credit downgrades as the debt piles up and their growth keeps going backwards or otherwise stagnates. What they're doing can't continue for more than a few more years before it causes serious problems.
Umm, what? That is nowhere close to a dangerous amount of debt. They're issuing debt because rates are so low that it is advantageous to do so. Free cash flow can easily take care of all their expenses (including dividend).
Bringing back some of the production to the US, which will benefit everybody by getting skills that are exclusively available in Asia onto the continent where most of it originated but now has been perfected and is only available outside the US. I don't live in the US but it's worrisome that we're comfortable with the concentration of EE manufacturing skills in one particular region of the world. Other industries are not like that and have state of the art production in all places of the world.
Everybody, besides Apple, because that means they'd pay more for the same work being done. Actually, they'd get robots to do the building.
One has larger risk but upside.
The same way Facebook is becoming the interface to content, both google and apple will own the consumer side of the cars and help you pick the best deal or cheapest option. It could be from Uber, a guy who owns a fleet of 20 autonomous cars or Hertz, etc.
This moves totally makes sense for Apple as they will move to own the consumer side of this market.
I feel like I get all the relevant and useful content I need, while minimizing the noise, specifically because I am not using Facebook...
The chess game afoot in the autonomous vehicle battle is attracting some strange bedfellows between Apple, Google, tesla, ford, Mercedes, Uber, Lyft, Volvo, Nvidia, etc.
The end game is outrageously big, generationally big, and it's going to be a treat to watch the Titans lock horns.
Will a hologram do it? I don't know; real-time holography isn't good enough to evaluate it. Would VR/AR, ocular implants, direct brain stimulation, just a giant wraparound screen, whatever? Also don't know.
I do know that given the choice between having a car drive me to work for a half hour vs. being able to conduct business with anyone in the world without leaving my house, I'd much rather have the latter.
VR is going to be a thing. And it will have a big impact on property prices: No need to go to the office. The manager will be able to walk around a virtual office as they like (perhaps in 'mute' mode where you don't see or hear them!). Collaboration will happen across distributed teams as it has never happened before.
Forget living close to work. Live somewhere you like will be the theme of choosing a property over the coming 2 decades. Long 'nice' locations on a hill, next to the sea, etc. Short 'necessary' locations near a commercial center.
Nothing like working in a panopticon !
With mass-market AR rolling around the same time frame (imho), telepresence that is actually wide-spread and disruptive will be here sooner than later.
This sentiment saddens me. The thought that philosophy - which begins with the examination of our beliefs and personal opinions through the lens of reason - could be considered impossible to talk about with nuance seems deeply wrong to me.
If that's your experience, you've been exposed to some very wrong, or very modern, philosophers. Philosophy is just talking about being, and a conversation about simulated versus 'actual' reality is the best place for it.
The missing piece is having it everywhere. Also maybe the issue of group telepresence at the home.
But even with that, it's still issues of culture and politics and power etc - why would venture capitalists want every startup to be remote ? why would big companies ? Is there difference in the cultures between such companies ?
Saving costs for one thing. Office space is expensive, even more so in areas like the Bay Area. Add to that the cost for stressed or even burned-out employees and the macroeconomic costs caused by traffic and you have quite an incentive for using telepresence instead of having people commute to their place of work every day.
The question is when this incentive will outweigh the incentive for keeping people in an office. Today, there's really no good reason for the latter other than office politics and power play.
Meeting face to face from time to time certainly is important but why not mix those two options? Why not make remote work the default case and only have people meet in person when it's really necessary (this would have the additional benefit of doing away with useless meetings)?
- Is Apple investing in Didi in order to see a straightforward return on investment?
- Is Apple investing in Didi in order to counter Uber's global expansion, so that they can begin to control the ride-share market themselves?
Their motivation for the investment would say a lot about their intent regarding their automotive plans (Project Titan). If they are doing this simply because they have a mountain of spare change sitting around and would like to put it somewhere to see larger gains while rubbing elbows with China's establishment, it might not signal much about their automotive intent. But if they are making the investment to staunch Uber's expansion into Asia (And maybe India, given Didi's investors' related holdings) in order to secure a spot for themselves at the global table to cash in on autonomous auto service, that's a whole different ballgame.
The actions may be identical but the intent is different.
Apple wants to get ibooks and movies selling in china again, it is vital to apples car strategy. This move will give them some leverage with china in getting those markets back to being active.
If you know anything about Tim Cook, you know that he is master of the supply chain. I don't think that someone like that is going to jump into apple building its own car.
So if apple isn't going to build a car, what ARE they doing with all these people on the pay roll who have worked with cars.
Its simple, apple wants to own the dashboard of the car, were not talking about "carplay" were talking about the WHOLE dashboard. Once you own the dashboard, your hooked into location, and destination (apple owns a mapping solution) they can leave it to vendors of vehicles to do the "self driving" compontent.
Why would any automaker want apple in the dashboard? Why would apple want the dashboard? Its simple, entertainment! Apple with the beats acquisition owns something that looks like radio, and music has always been there with iTunes. There is no reason you can't rent movies and books into the back seat as well.
The Apple Car in the suburban garages is the worst kept secret in Sunnyvale.
The same place where Mercedes R&D resides.
An electric car is just an iphone on wheels.
Google has their small fleet collecting data; Tesla has tons of vehicles now collecting data; Uber has the potential to start collecting data. Apple has no ability to collect real world data... Until now?? Smart move Apple
Maybe we'll see a 3d street view with iOS 10.
If they want to please the government they'd just pay more local tax.
In China there isn't really a private/public divide like the U.S., bribing and knowing people in government is absolutely essential in China. Sure, it helps in the U.S. (and every other country), but it's not essential. China is a different beast. Doing business in mainland China is quite the experience, I know of no one who actually likes doing it. The Chinese are still communists after all, and if you have a supplier there...they are not loyal. They will knock your stuff off in a heart beat as soon as you leave.
There absolutely still is a difference between private and state-owned companies. There are even cases where Huawei loses government contracts to Cisco. Like you said, the water is murky in China, and the favor of Chinese government cannot just be bought by a tiny investment such as this.
There is no guarantee that just because you are a Chinese company, the government will be on your good side. At one point Alipay was almost banned due to some central bank regulation. Didi also has a competitor named Kuaidi, which for all we know can have even deeper connections with the CPC.
To me, this deal is about "You can sell XXX, if you do YYY" YYY may be investment, technology transfer, many things. But a lot of China deals and inward investment in R&D, Operations or Technology are in fact driven by sales. "We need to sell this, and in order to do so, we've been told we also need to YYY."
You need to answer your own question, that is even if Apple's intention is to please government, why would they choose to invest in a ride-sharing company? Why not choose to build a completely isolated iBooks/iTunes store and grant government free access for censorship, that won't cost 1 billion.
I mean, could this be related with Faraday Future? The mysterious "US-based, Chinese-backed company" that plans to invest $1B in California, "focused on the development of intelligent electric vehicles and mobility solutions" , that many suspected it's a front for Apple's car.
Jobs was a different person, Tim Cook leads company differently. I really like how he plays this.
The political good favor and potential for growth against competitors in China is a huge value. Well worth the investment.
It's not difficult to build a ride sharing app (it's all well known technology). It's difficult to gain market share.
This $1B is a temporary ticket out of jail for Apple. Intel had to pay its $1.5B last year, Qualcomm didnt pay and was fined >$1B for 'abusing monopoly position'.
what....? Apple is thriving in China. Everyone and their mom has taken out loans to buy an IPhone. I'm not even exaggerating.
Foreign cars outsell the locals brands by a large margin
> "(The deal reflects) our continued confidence in the long term in China’s economy," Cook said.
If this is not kowtowing, I don't know what is. This is very disappointing coming from a company like Apple.
The more contentious issue is with builtin apps and platform capabilities, e.g. it's possible Apple's map could show directions and prompt a one-click Didi ride. Google already does something like that with Uber, but it could be even more tightly integrated with payments, and in a way that the platform could favour certain providers.
If they make $1.00 for each ride, that's already more than $4 billion in revenue per year.
This is an incredibly smart move and a great long term play which will bode well for Project Titan.