Lei Jun, Xiaomi CEO, speaks during a press conference in Beijing Wednesday. (Photo: GT/Li Qiaoyi)
Gets access to struggling pioneer's patents
Ninebot Inc, a Beijing-based three-year-old start-up, said on Wednesday it has fully acquired upright self-balancing scooter pioneer Segway Inc, giving it access to the struggling U.S. firm's patents.
The 100 percent acquisition included all the assets of Segway, "the industry originator," with a presence across Europe, the U.S. and the Asia-Pacific region, Gao Lufeng, chief executive of Ninebot, said at a news conference in Beijing on Wednesday.
Announcing that Segway has become "part of Ninebot," Rod Keller, president of the Bedford, New Hampshire-based firm, said in a video message aired at the Wednesday news conference that Segway holds over 400 patents around the world.
"Ninebot is a fast-growing short-distance transportation company backed by well-known investors," he stated, placing high hopes on the combination.
The Wednesday declaration about-turns a face-off between the two sides, as Segway said in a statement on its website in November 2014 that the U.S. International Trade Commission (ITC) has opened a probe into a number of personal transporters, including Ninebot, for infringement of Segway's patents and copyrights.
The ITC could not be immediately reached for comment.
Both made no mention of the investigation at the news conference.
Prior to the buyout announcement, Ninebot said in the same news conference it has closed an $80 million Series A funding round from investors that included upstart Chinese smartphone vendor Xiaomi Inc and U.S.-based venture capital firm Sequoia Capital.
"The purchase has won approval by regulatory authorities in both China and the U.S.," Gao told the Global Times on the sidelines of the event.
He declined to disclose how much the acquisition is worth.
The Segway brand will be maintained to form a duo with the Ninebot brand, Gao said, without elaboration.
At the news conference, Xiaomi CEO Lei Jun said he "personally likes the devices very much," which prompted him to decide on the investment "without hesitation."
The purchase paves a shortcut for the Chinese self-balancing vehicle start-up to go global, Lei stated, noting that the integration of the acquired assets into Ninebot will be difficult yet critical for the firm's longer-term outlook.
Currently, Xiaomi is the largest institutional stakeholder of Ninebot, according to Gao.
The next decade is set to see high growth for innovative short-distance transportation, Gao said while announcing the deal.
He estimated that the size of the market will hit more than $100 billion globally, without giving a timeline.
Segway sells about 10,000 units globally every year, with sales volumes standing at $40 million, domestic IT news portal leiphone.com reported on Wednesday.
Chen Zhifa, co-founder of Inmotion Technologies Inc, and Wu Xilong, co-founder of Dongguang Robstep Robot Co, two domestic rivals to Ninebot, were quoted as saying in the same report that except for the patents, the deal may not prove to be a big boost for Ninebot.
The Global Times could not reach Chen and Wu for further comment.
Wang Ye, a co-founder of Ninebot, said that his company was expected to sell 20,000 self-balancing vehicles units worth nearly 200 million yuan ($32 million) in 2014, as cited by leiphone.com in a report in December 2014.
Ninebot did not brief on its shipments at the news conference on Wednesday.
Industry watchers, however, are less optimistic about the market segment which Segway inventor Dean Kamen said in 2001 "will be to the car what the car was to the horse and buggy." Segway is undergoing the latest takeover of its ownership, following its two previous sales in 2010 and 2013.
"The use of standup electric scooters is limited as compared to other vehicles, making it a rather niche market," Jia Xinguang, an expert at the China Automobile Dealers Association, told the Global Times on Wednesday.
Safety concerns are also haunting potential buyers.
"I are interested in taking a self-balancing vehicle for a short-distance ride, but I might not eventually buy one," 30-year-old Xiao Yang, who works for a State-owned firm in Beijing, told the Global Times on Wednesday, citing safety worries.
The use of the devices is tightly restricted in cities such as Shanghai and Beijing.
Shanghai traffic police ban self-balancing electric vehicles from city roads, and violators are fined 50 yuan, the Information Office of Shanghai Municipality said in a Weibo post in December 2014.
The traffic authorities in Shanghai ruled that battery-powered and self-balancing gadgets, which do not qualify as motor vehicles or non-motorized ones, have no right to run on the road, according to the post, citing Shanghai's Regulations for the Management of Non-motorized Vehicles, effective in March 2014.
Calls to the Shanghai traffic police department for more details went unanswered by press time.
Such vehicles are also forbidden from city roads in Beijing, according to media reports. The Beijing Traffic Management Bureau failed to reply to a Global Times fax inquiry by press time.
Commenting on the ban on use of self-balancing vehicles on the road, Ninebot's Gao said Wednesday that the company hopes to participate in the formulation of relevant national standards for the devices to help popularize their use.
