4 ms·

I wonder how this would have played out differently if cab companies developed decent "hail by mobile" apps. Hell, they still can: mobile app design isn't that

by exelius 12y ago

I wonder how this would have played out differently if cab companies developed decent "hail by mobile" apps. Hell, they still can: mobile app design isn't that hard/expensive, and they can just use mobile phones like Uber. The opportunity still exists for them to do so. Uber is really not all that novel in what it does: at the end of the day, its main use case is to be able to hail a cab with your phone and verify said cab is coming to pick you up. But the author is right; this service is a commodity. Uber has been trying to differentiate through platform lock-in, but cab drivers will do anything to make a buck. Short of anti-competitive practices (which Uber has certainly had no shortage of) there's no good way to ensure your drivers don't leave you at the drop of a hat when something else pops up.

cwyers 12y ago
This has been around for a while; it was called Taxi Magic, it's now called Curb.
- zevyoura 12y ago
  FlyWheel is the main "official cab app" player in SF; it's advertised on most cabs.
pinkyand 12y ago
UBER is far from a commodity. The ride sharing business(especially if we talk about 2 or more people sharing a ride with the same driver) has strong network effects - the more passengers you have ,you can offer cheaper prices and share rides optimally. In business that enjoys a network effects we usually see one winner controlling the market, and i suspect that's what we'll see here, and that's why UBER got such a huge valuation.
- exelius 12y ago
  I think you misunderstand how network effects work. What you're talking about is too localized and transient to really be considered network effects -- I can also share rides in a normal taxi if I hail a cab with 2 friends. A key component of a true network effect is that it enables exponential scalability: Facebook is the textbook example here in that it becomes more useful the more people use it. Another key component of network effects is that they enable platform lock-in by creating enormous barriers to entry for potential competition. Uber enjoys a small amount of the second component through their large driver network; but taxi drivers are more or less a commodity so there aren't really barriers to entry for a competitor to go hire a bunch of drivers. With Facebook, there's more lock-in: even if lots of people are on a competing service, if YOUR friends aren't, it has no increased value. There is no such personal component with Uber. Eventually, what I see happening are a number of competing services popping up that drive down the payments that drivers receive. This will eventually bottom out the market for taxi drivers to a supply/demand equilibrium point, which is exactly what's supposed to happen in a commodity market. My guess is that Uber's long-term plan is a brand play: everyone with even a little bit of future vision knows that self-driving cars are right around the corner, and Uber is trying to establish itself as the premier on-demand transportation service before that happens. Because once self-driving cars ARE available, anyone with deep pockets will just be able to buy a fleet and put them on the road. If Uber can establish itself before that happens, they'll have differentiated themselves with the strength of their brand, which again is the optimal strategy in a commoditized market. But I see Uber being the #1 company in a crowded market with a ~20-30% market share; not 70-90% as is often seen in markets with strong network effects.
ajmurmann 12y ago
Taxi companies also would need to work on their quality issues. I've had too many taxis in SF and suburban Portland that were filthy and run down and had incompetent drivers. Never happened with Uber. EDIT: I think that there just is almost no incentive for taxi companies to improve on anything because they have had a quasi monopoly in a market that is completely underserved. When you needed a cap pre-Uber in SF, you were happy to get any cap at all. That all comes down to taxi medallions.
- nhaehnle 12y ago
  It's important to understand that the medallion mess is a local issue. Uber is acting like a bully with no regard for the law even in places where getting a taxi license is basically just a simple extension to your regular driver's license.
- adrianwaj 12y ago
  I wonder what'd be like if individual taxi drivers had online reputations and histories like ebay sellers.. then that could be really useful. You could even take a cab in a not-so-safe country with confidence. The problem here is what if a different driver arrives (I suppose the website should have a photo of the driver that one should expect.) Also, successful drivers themselves may become targets for whatever reason. Could work for the driver if they can transfer between companies and keep their reputations. They could even relocate. Another future industry that could be disrupted in such a manner: personal security and tour guides .. used in countries that are generally unsafe. Is there an ebay/uber for tour guides?

by exelius 12y ago

cwyers 12y ago

This has been around for a while; it was called Taxi Magic, it's now called Curb.

zevyoura 12y ago
FlyWheel is the main "official cab app" player in SF; it's advertised on most cabs.

pinkyand 12y ago

UBER is far from a commodity. The ride sharing business(especially if we talk about 2 or more people sharing a ride with the same driver) has strong network effects - the more passengers you have ,you can offer cheaper prices and share rides optimally. In business that enjoys a network effects we usually see one winner controlling the market, and i suspect that's what we'll see here, and that's why UBER got such a huge valuation.

exelius 12y ago
I think you misunderstand how network effects work. What you're talking about is too localized and transient to really be considered network effects -- I can also share rides in a normal taxi if I hail a cab with 2 friends. A key component of a true network effect is that it enables exponential scalability: Facebook is the textbook example here in that it becomes more useful the more people use it. Another key component of network effects is that they enable platform lock-in by creating enormous barriers to entry for potential competition. Uber enjoys a small amount of the second component through their large driver network; but taxi drivers are more or less a commodity so there aren't really barriers to entry for a competitor to go hire a bunch of drivers. With Facebook, there's more lock-in: even if lots of people are on a competing service, if YOUR friends aren't, it has no increased value. There is no such personal component with Uber. Eventually, what I see happening are a number of competing services popping up that drive down the payments that drivers receive. This will eventually bottom out the market for taxi drivers to a supply/demand equilibrium point, which is exactly what's supposed to happen in a commodity market. My guess is that Uber's long-term plan is a brand play: everyone with even a little bit of future vision knows that self-driving cars are right around the corner, and Uber is trying to establish itself as the premier on-demand transportation service before that happens. Because once self-driving cars ARE available, anyone with deep pockets will just be able to buy a fleet and put them on the road. If Uber can establish itself before that happens, they'll have differentiated themselves with the strength of their brand, which again is the optimal strategy in a commoditized market. But I see Uber being the #1 company in a crowded market with a ~20-30% market share; not 70-90% as is often seen in markets with strong network effects.

ajmurmann 12y ago

Taxi companies also would need to work on their quality issues. I've had too many taxis in SF and suburban Portland that were filthy and run down and had incompetent drivers. Never happened with Uber. EDIT: I think that there just is almost no incentive for taxi companies to improve on anything because they have had a quasi monopoly in a market that is completely underserved. When you needed a cap pre-Uber in SF, you were happy to get any cap at all. That all comes down to taxi medallions.

nhaehnle 12y ago
It's important to understand that the medallion mess is a local issue. Uber is acting like a bully with no regard for the law even in places where getting a taxi license is basically just a simple extension to your regular driver's license.
adrianwaj 12y ago
I wonder what'd be like if individual taxi drivers had online reputations and histories like ebay sellers.. then that could be really useful. You could even take a cab in a not-so-safe country with confidence. The problem here is what if a different driver arrives (I suppose the website should have a photo of the driver that one should expect.) Also, successful drivers themselves may become targets for whatever reason. Could work for the driver if they can transfer between companies and keep their reputations. They could even relocate. Another future industry that could be disrupted in such a manner: personal security and tour guides .. used in countries that are generally unsafe. Is there an ebay/uber for tour guides?