K I Woo
Jun 16, 2015
During the past decade, innovative entrepreneurs have successfully disrupted many established businesses and industries.
Apple’s iPod totally disrupted and transformed the music business by selling single songs digitally for $US .99.
At the same time, Amazon redefined the book sales industry by offering customers access to millions of book titles at economical prices and reasonable delivery fulfillment times.
Within a short period, many traditional stand-alone book stores that could only economically carry about a 1,000 titles were forced to close shop.
Today, Uber, which began as an on-demand car-service application is disrupting not only the taxi business but is quickly changing the way planners think about transportation.
Mobile movement
Launched in the summer of 2010 in San Francisco, with only a few cars, a handful of employees and a small seed-round of financing, Uber began to ride what has become a most important tech scene trend, mobile movement.
As of June 2015, the still private company has been estimated to have a remarkable market capitalization of about $US 50 billion.
After customers enter credit information on to the simple Uber-designed app, cars can be immediately summoned by pressing a button, even in Bangkok.
GPS tracking takes care of location, so drivers can pick up customers in minutes. The costs are automatically charged to the customers’ pre-registered credit-card account and all tipping is included.
Uber services are now offered throughout the world.
Huge objections everywhere
Similar to all disruptive ideas, entrenched traditional suppliers around the world are vigorously fighting back.
Uber has been forced to wage huge battles with the taxi industry that is trying to protect highly regulated and restricted entrenched industry investments.
Globally, cities that limit cab licenses issued, have seen cab industry barons drive up “medallion or key” prices through private transfers. Because licenses in some cities are traded on the private markets as high as a reported $US700,000 per medallion in New York City, regulators are often bombarded by industry officials whenever they discuss issuing new licenses.
In Chicago, partially because of Uber’s arrival, cab-license prices have fallen substantially from the current $US350,000 per car.
Via twitter, Uber’s founder Trevor Kalanick said his company offers cab-drivers and consumers a much better deal.
He claims that an Uber driver working at least 40 hours a week in New York City can make $US90,000 per year whereas the median cab-driver’s salary is $US38,000.
At the same time, Uber drivers don’t have to buy “taxi medallions” to drive customers around the city, a saving that will ostensibly be passed on to consumers.
San Francisco Cab Drivers’ Association, president Barry Korengold told Vanity Fair “they started off by operating illegally without following any of the regulations and unfairly competing.”
In response, Kalanick told Vanity Fair that Uber should have realizes sooner that they were running political campaigns against the establishment in every global city.
Uber’s value-added
Uber’s most value added in any city is its ability to allow customers to hail rides almost immediately by smartphones.
Customers can also digitally track their assigned cabs as they head toward them.
Because rates are established digitally and payments are made by credit cards, no haggling with taxi drivers is required. The GPS system provides additional assurance by mapping out the intended routes and records are kept for posterity.
Large ambitions
Kalanick has large ambitions for Uber.
“We want to get to the point that using Uber is cheaper than owning a car. Transportation that’s as reliable as running water,” he said to Vanity Fair.
More cars, he said will mean cheaper rides for all.
Uber, Kalanick said has the potential to be a major player in a smoothly functioning instant-gratification economy, powered by the smartphone as a way of life.
“If we can get you a car in five minutes, we can get you anything in five minutes.”
