Bicycle replacements for Beijing?

Beijing-based Ninebot, maker of self-balancing, personal transportation vehicles, just bought Bedford, N.H.-based Segway, which in 2002 introduced self-balancing personal transportation vehicles — and is Ninebot’s main competitor!

The acquisition came quickly on the heels of an $80 million funding round for Ninebot from Xiaomi Corp., the Beijing-based smartphone maker, which also included the likes of Sequoia Capital, Shunwei Foundation and West Summit Capital.

Xiaomi and Shunwei are part of a group of businesses associated with investor Lei Jun, who Forbes estimates is worth $13.6 billion.
Terms of the April 1 sale were not disclosed.

What’s really driving this acquisition?

If Ninebot wants to be an international brand — with products available in 38 countries to date — it needs to be able to sell product in the U.S. market, which more than likely would be blocked by Segway’s pending complaint that Ninebot infringes on one or more of Segway’s 400 patents for personal transportation vehicles.

In November 2014, The U.S. International Trade Commission agreed to investigate Segway’s claim that Ninebot and other Chinese manufacturers had infringed its patents.
Bloomberg reported, “Segway had been seeking to block imports of the transporters in an investigation that would probably have taken 15 to 18 months, in November.”

That would have put a major roadblock in the way of Ninebot’s expansion plans. Interestingly, reports say that Ninebot and Segway began their hush-hush talks in October 2014.

Early even: Gao Lufeng, Ninebot’s founder and CEO, said the negotiations were long and contentious and began February last year [2014]?half a year before Segway accused Ninebot of patent infringement.

Did Segway miss the memo?

A Forbes article from last June summed up Segway’s history: “In stark contrast to expectations, sales of the Segway were a massive disappointment. Now, more than a decade after its release, the product has been all but forgotten, relegated to niche uses like police patrols, city tours, and a nerdy take on polo.”

As Silicon Valley investor Paul Graham simply said of the Segway: “People don’t want to be seen riding them.”

Today, Amazon lists the Segway i180 Human Transporter for $2,199; the Ninebot Elite runs $3,049.

The brainchild of Dean Kamen, the original idea behind Segway as a smogless, electric, urban people mover, “got buried amidst the cacophony of rumors and headlines and forgotten with the passing of time,” according to Forbes.

However, the concept transfers well to smoke-bound, mega-cities like Beijing (population 21 million), where one-person, electric people movers may have some sales pull for Ninebot.

China has more than 450 million bicycles, and went from selling 330,000 electric bikes in 2000 to selling 20 million in 2007. Over 1,600 companies, ranging from start-ups to Honda, are competing for the $100 to $300 business, well below Ninebot and Segway’s pricing. China’s rising middle class — 139 million strong and a powerful purchasing force — may think 3 grand is well worth it.

“Frank Jamerson, co-author of Electric Bikes/Worldwide Reports, predicts annual global sales of electric bikes and scooters will total about 100 million within 10 years,” said Forbes. “Electric-powered scooters and motorcycles will soon outsell gasoline-powered scooters and bikes.”

“Accelerating the trend is a growing number of cities that ban gasoline-powered two-wheelers because of air pollution.”

After allying with Segway, Ninebot will use electric driving, mobile Internet, and man-machine interaction technologies for future products, said Gao. He acknowledged at the press conference also that Xiaomi holds a controlling stake in Ninebot.

“Ninebot is a fast-growing, short-distance transportation company backed by well-known investors,” Segway President Rod Keller said in a video message shown at the press conference Wednesday. “The combination of Ninebot and Segway will bring together industry-leading research, development, engineering, and manufacturing.”

Xiaomi, China’s largest smartphone maker, is expanding into Web-enabled smart home devices and consumer electronics by taking stakes in other startups. The company has backed 27 such companies and plans to invest in as many as 100, Xiaomi’s Lei Jun has said.

How about a Xiaomi app that connects up all those Ninebot transporters bumper to bumper on the streets of Beijing?