Uber is far more than a ride-sharing app; instead, it represents a new kind of business model that could radically change and completely upset local transportation.
Uber has already shaken up the taxi cab industry on two continents, Europe and North America. In Europe, Uber has scared licensed cab drivers, mostly middle class professionals whose families have controlled the business for decades. In the United States, Uber has effectively challenged local taxi cab monopolies, politically connected companies that gouged high profits from cab users by keeping the number of taxis on the streets low.
Uber vs. Taxi Cabs
Basically, until Uber came on the scene, the cost of entering the cab business in most developed nations was highly prohibitive. You had to have a special license and a meter, in addition to a vehicle. In many American cities, the number of cab licenses and cabs is very limited. The licenses go to a few politically connected companies that have little or no incentive to offer decent service or affordable rates.
This is why cabs have such a bad reputation in the United States and most Americans under the age of 50 have never ridden in one. In cities like Denver, “cab service” has traditionally consisted of a dirty ex-police car that’s 15 years old and driven by an immigrant who barely speaks English.
Cab companies are beginning to compete. In recent months, I’ve noticed that cab companies in Denver have launched a booking app and put late model hybrids (such as Toyota Priuses) into service. The new cabs are even clean. Nothing improves service like competition.
Uber makes it cheap and easy to enter the cab business, and now it’s moving into other areas where it might have a similar effect. Uber offers a transportation option for parents of young children. Basically, it will haul kids to school or other locations, such as soccer practice.
Uber has rolled out Uber Rush, a bicycle messenger service in Manhattan. Rush could be easily applied in other cities such as Denver, as well as expanded to include cars or vans. One possible use of Rush could be delivering pizzas and other food items. If it were ever combined with Google’s Shopping Express, Rush could be a serious competitor to Amazon Prime.
UberX, which offers low cost rides for the working class, is currently testing this in Colorado Springs, Colo., a basically working class military town. The Springs has a lot of military personnel who don’t have cars, and it has notoriously terrible public transit. UberX could also be a model to roll out in other small cities.
UberX seems designed to attract some traditional cab riders, including the handicapped, senior citizens, and those who cannot afford a car. It probably isn’t a viable alternative to public transit, but UberX could help such people reach medical appointments or perform errands such as shopping.
All this is what technology journalists call a game changer because it represents a fundamental change in lifestyles. New York Times writer Farhad Manjoo notes that Uber gives people less reason to own a car.
How Uber Could Change Your Lifestyle
That might mean fewer cars on the streets of American cities, less traffic congestion, and lower car-insurance rates because of fewer accidents. It might also mean more parking places in some cities. Major beneficiaries might include the poor who wouldn’t have to spend a large portion of their meager incomes keeping a broken down old trap on the road.
Also helped could be middle class families who do not need to own two cars any more. Since car ownership costs around $9,000 a year for the average American, that could be a $9,000 income boost for the family.
Uber has made the argument that its service is cheaper than owning a car, which if true, would be a real game changer. Obviously, claims or numbers that come out of a company should be viewed with skepticism, but it is an interesting argument.
Basically, Uber represents a radical change in behavior as much as anything else. Like Walmart and Amazon.com, Uber has the potential to fundamentally alter our lifestyles if it succeeds. Even if it fails, Uber will change the way we get around our cities forever.