Apple Inc.’s (AAPL) $1 billion Leg Into The Car Manufacturing And Services Industry

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A peak into Apple’s new found goals

Apple Inc.’s (NASDAQ:AAPL) sudden investment in China’s biggest ride hailing service seems to come out of the blue but there is a much bigger play here than what’s obvious. The $1 billion investment in Didi Chuxing is one of Apple’s biggest to date and the deal was executed in haste in just 22 days. It seems that for Apple, this was an opportunity that they just couldn’t miss and putting the pieces together points to Apple turning its services genius to cars and car services.

With global mobile sales growth slowing, it was only a question of time for Apple before it had to look for its next hit product. After a quarter in which the company reported its first iPhone sales decline in a decade, that eventuality now seems imminent. For months now the prospect of Apple’s entering into auto making and transport has been a very real possibility. Tesla CEO called Apple’s car ambitions an open secret but there has been no proof of this until now with the massive investment in Didi Chuxing that indicates that Apple will soon open up about its transport ambitions.

Apple is increasingly growing to think of itself as a services company much like other Silicon Valley giants instead of simply a phone maker. Its ecosystem is proficiently monetized and fast growing, thanks to its premium product mix. Its services segment has therefore grown to become the second largest division inside the company behind iPhone. It seems that Apple is now considering using its hardware software packaging approach with cars. Apple’s aim might well be to create a self-driving vehicle, as cutting edge companies like Tesla and Google are trying to do but beyond that, the company wants to bring its services to these cars. Self-driving paves the way for a huge improvement in the transport system which will probably start with companies like Uber or Didi Chuxing and their network of drivers which will be catered to by self-driving fleets. China remains a growth market for all; Apple, transport industry, and ride sharing, so it makes sense that Apple is pairing up with a local company such as Didi. An investment in Didi could also lead to a closer understanding with Chinese authorities, a lack of which has shut down some of the company’s services in the country recently.

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