Apple Tipping Toes into O2O Space, Invests in Didi

Apple just announced that is has invested US$1 Billion in the leading Chinese ride sharing service Didi Kuaidi. Didi is the largest app-based ride-sharing service in China clocking more than 300 million rides a day leveraging its 300 million strong user base across China. We think this is a great move from Apple to tip its toes into O2O services space as the value in the industry is being shifted from hardware to software to services. Following are some thoughts on this move by Apple:

  • This move allows Apple to use its surplus cash lying around outside of USA and promises better return on investment in the long run as this is one of the hottest O2O segment
  • Didi is a huge scale platform and a channel for Apple to scale its services such as Apple Pay, Apple Music and so forth.
  • Along with the investor pay out, the platform integration can generate lots of revenue sharing opportunities as being associated with Apple will boost Didi’s brand equity against Uber
  • With some data sharing agreement, Apple could also get a sneak-peek into the behaviors of Chinese consumers while on road which will definitely help Apple in its “Apple Car” ambitions
  • This investment will also pacify some investors that Apple has started thinking beyond iPhones into services space and arrest the decline in mindshare among its investors, classic PR move.
  • This also earns brownie points for Apple among Chinese government that Apple is helping Chinese companies and may relax its stance against some of the Apple’s offerings
  • This would be the start of many potential investments from Apple in coming months and years in hardware (e.g. battery tech) or cloud (storage, analytics, etc) to succeed in the upcoming Big Information era.

In summary, as always great timing for Apple to investing a billion dollar in Didi, as the news alone might add multiple billion dollars in Apple’s market cap in coming days, Good ROI isn’t it?