Ever heard of the Segway electric scooter? If you haven’t, then it’s alright. Anyway, no one would want to hear about a failed brand or product, would they? And if you are an electronic buff, you might have read about it, but never had the chance to drive it because it was way too pricey. Only the rich and famous can afford what appears to be the pioneer personal electronic vehicle. Moreover, the Segway electric scooter was never developed for the mass market, but for military, security, and corporate applications. If you have ever been to a mall, you could have seen one of those oversized security guards roaming on a Segway. And you may not know it, but the Segway inspired the development of the more popular hoverboard.
The Segway electric scooter was invented and founded by Dean Kamen 15 years ago, and the brand name would become synonymous with any self-balancing gyroscopic gadget. The original electric, two-wheeled, self-balancing personal transporter made its debut in 2001 with much fanfare, but never received the commercial and critical acclaim it hoped for. What was once hyped as the “future of transportation” was named as one of the 50 Worst Inventions by the Time magazine. Segway was a subject of ridicule by the American public, but for some tech companies, it was a technology worth duplicating and tinkering with – something they could sell to the masses.
Enter Ninebot, Segway’s first real competitor
Every pioneer technology would inspire imitations or copycats, with each one of them claiming to be cheaper and far better than the original. The technology behind Segway electric scooters was one of its kind during its time. Ten years after Segway’s debut, not a few tech companies have copied the technology and released their own versions of self-balancing scooters, including hoverboards. One such company was the China-based Ninebot, established in 2012. Ninebot released a model that was beautifully designed and somewhat resembled the Segway scooter with regards to level of ride technology and built quality, but only at less than half the price.
Segway, of course, was not happy. It felt threatened by a rival business, and was alarmed that the Chinese upstart could wipe out its share in the electric scooter market and eventually erode its brand. The US company accused Ninebot, plus other Chinese companies, of infringing its patents since their scooters do resemble one another. Unable to come up with a better response to the competition, Segway filed a trade complaint. The Chinese company vehemently denied the accusation, insisting that it independently own its intellectual property.
Ninebot purchases Segway
In a twist to the tussle between the two companies, a development that the personal electric vehicle industry did not expect: Ninebot purchased the struggling Segway for an undisclosed sum in April 2015, just seven months after the latter filed a trade complaint against the former. Prior to the acquisition by Ninebot, the company was sold twice to investors, due to limited success. The first was in 2009, to a British entrepreneur Jimi Heselden who died in an ironic yet tragic Segway crash in 2010, and the second, in 2013, to Summit Strategic Investments whose project to “refocus” the company was never completed.
The acquisition of Segway (the original) by Ninebot (the clone) was made possible with funding from investors. The Chinese electric scooter manufacturer received a combined $80 million investment from Chinese smart-phone company Xiaomi and three venture capital firms namely Sequoia Capital, Shunwei Capital, and WestSummit Capital. Ninebot did not mention how much of the investment money went towards the said acquisition.
But why purchase Segway? Ninebot wanted to end not only its copyright feud with the American company, but also a larger controversy that is hounding China, its base country, for too long: Copycat China or in other words, the country’s widespread pattern of copyright infringement. Well, it is no secret that counterfeit markets abound in China, which manufacturing industry values imitation over innovation, and even shamelessly export them to other countries. By purchasing Segway, Ninebot is helping China clean up its reputation and expand though its own innovations. Purchasing other companies is just one way for China to solve its copycat problem.
But why Segway? Ninebot co-founder Wang Ye admitted in an interview that his company bought Segway for the patents. Ninbot is stronger than Segway, but it is still young and cannot apply for many patents. Segway, on the other hand, already has the core patents for self-balancing vehicles, so purchasing the company will help Ninebot with their own patents, plus expand its product portfolio. The acquisition also had to do with branding, since Segway is synonymous with self-balancing electric scooters. Its brand visibility in US and Europe made it a wise purchase.
Big and rich companies buy small and poor companies all the time. The acquisition, however, did not mean the end of the long-suffering American company. Segway will not close shop. As a wholly-owned subsidiary of Ninebot, it will still operate as a separate brand with its own products. The two companies are united under a strategic alliance of sorts, with the purpose of inventing smarter and greener short-distance vehicles. Ninebot will continue to offer high quality electric scooters at a much lower price. As for Segway, the alliance with Ninebot with further enable them to develop more intelligent and valuable products for their customers. What could be the best term to describe the relationship between the two companies? Sibling rivalry, that is.
What does it mean for the electric scooter market?
What an awkward and intriguing development! This has resulted to an interesting and ironic business deal. The acquisition of Segway by Ninebot will help boost the self-balancing electric scooter market. Rather than to scare off potential competitors, the acquisition will help spur competitiveness and excellence in the personal electric vehicle industry. This will motivate manufacturers to roll out high quality personal transporters with upgrades and more cool features. Thanks to the entry of Ninebot, self-balancing scooters have truly become a consumer electronic product.
What does it mean for China?
As for China, the acquisition will mean many things:
- Ninebot’s financial backer Xiaomi is China’s answer to Silicon Valley’s Apple which is now investing in an electric car. By placing Ninebot under its umbrella (or ecosystem), Xiaomi is already one step ahead of Apple in the electric vehicle game. Xiaomi looks to conquer all hardware media platforms in mobile, TV, and now smart vehicles.
- China is the world’s largest market for two-wheeled vehicles, and it already has a manufacturing base that can serve the self-balancing electric scooter market. India, the second largest market, imports components for their electric scooters and motorcycles from China.
- China may excel in the self-balancing scooter department since Segway is already a hit there. Chinese consumers have taken to the technology more than the Americans do.
- Beijing and other large cities in China top the list of most congested and polluted metropolitan areas in the world. Mass adoption of smaller-sized electric vehicles like self-balancing scooters may help ease traffic woes and save parking space. Moreover, the mass adoption of self-balancing electric scooters will help boost the electrification of transportation in China. As mentioned earlier, finally an end to China’s copycat problem. Xiaomi and Ninebot will help China’s manufacturing industry expand through innovation and acquisition.
Tech industry observers will not know how long Segway would stay in the self-balancing scooter game. Though it still can operate as an entity separate from Ninebot, its future is uncertain, but who knows what it holds? Ninebot and Xiaomi may decide to cease Segway’s operations one day, claim its technologies, and use them for their own ends. But one thing is for sure: The self-balancing scooter market is just heating up, and it could be the next big thing in electric mobility.