Uber has to work on self-driving technology, but in a certain way doesn't self-driving technology seem like something that will eliminate Uber's market advantag

Uber has to work on self-driving technology, but in a certain way doesn't self-driving technology seem like something that will eliminate Uber's market advantage? Right now, Uber is the go-to choice in most areas because of network effects. They have the most drivers because they have the most users. They have the most users because they have the most drivers. In a world of self-driving vehicles, anyone with capital can buy a fleet to blanket a city. If you can finance a self-driving vehicle for $400/mo, it's not that hard to launch in a new city. Sidecar operated in my top-10 city with what seemed like 5 drivers. That was too few and it was terrible (given that a lot of the time they might not be on-duty). But if one could get 20 self-driving vehicles for $8,000/mo, it's an easy way to launch. If adding new vehicles is as easy as going to a local dealership and putting down your VC money, you could get more on the road within a day to meet demand. In the early days, you could keep a close eye on demand and over-provision a little. Self-driving vehicles change the market from being one of network effects (where Uber has a huge advantage) to one of capital spend. Uber does have a lot of capital, but what if GM wants to get into the game? GM gets cars at cost and GM has a brand that people know/trust (they're not some no-name I'm-Uber-Too). Worse, it's a market of variable capital expenditure. With cable TV/internet, a lot of the costs are fixed costs (actually laying all the cable and such). With wireless service, there's a limited amount of spectrum and a lot of fixed costs creating the network. With self-driving taxis, it seems like the vast majority of the costs are variable costs that go up with the number of riders. There's really nothing stoping a city from having dozens or even a hundred different self-driving taxi companies. I doubt it will be hundreds as it's hard to run a good company, but it does mean there won't be a good opportunity to push high margins onto consumers. An attempt at high margins would mean another company scooping up that business. I guess I just don't see how Uber maintains high enough margins in what will become an incredibly price-competitive market where it's relatively cheap for new players to join. If Sidecar could have spent $8,000/mo to launch in my city with good coverage, they would have made users happy rather than frustrated that there were no drivers around. They could have been successful. $96,000 isn't a lot of capital needed to start up for your first year. A Dunkin' Donuts franchise costs more than that to start up (from a little Googling). At $5/ride, vehicles would only need to do 3 rides a day to justify a $400/mo price tag. Even at $2/ride (less than public transit), you'd only need to do 7 rides a day for that $400/mo vehicle. That doesn't deal with fuel costs, but you can see how you don't need a lot of usage to cover the cost of the vehicle. If you think about fuel costs on a Prius and a maybe a 5 mile average trip (which seems quite long), you're talking about 1/10th of a gallon or around 20 cents for fuel. A trip that might cost $15 on UberX drops to under $2.50 at-cost for a service that isn't popular (its vehicles only do 7 rides/day) and way lower cost for popular services. So, Uber is going to have to push its margins way down (and keep them down) to prevent someone from wanting to enter a market that requires such little capital.