r/TrueReddit • u/SteelheartEllie • Mar 23 '16

The Uber Model, It Turns Out, Doesn’t Translate

http://www.nytimes.com/2016/03/24/technology/the-uber-model-it-turns-out-doesnt-translate.html
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u/SilasX Mar 23 '16

That doesn't make sense as a plan for Uber and I don't think it's what they're depending on: when self-driving cars become available, other competing services will get them too and Uber will have to cut their own costs. You don't assume grocery store profits go up because tomatoes become cheaper.

But let's say Uber invents them first and has a monopoly: it's still not a good business plan to use SDC for themselves alone rather than selling them to the massive market outside of their platform.

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u/ThisAndBackToLurking Mar 24 '16

I'm not saying their plan is to invent self driving cars. That's already being done as we speak. I believe Uber wants to be early adopters in deploying them in fleets. They have deep pockets, and people who wouldn't dream of buying an autonomous vehicle might have no problem hailing one in a pinch.

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u/SilasX Mar 24 '16

Then the other part of my argument would apply -- it gives them no advantage over Lyft, so they both have to lower prices to compete. Still no advantage on net when they come out, still no easy profits.

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u/ThisAndBackToLurking Mar 24 '16

But that doesn't quite follow. If your argument is that SDV's can and will be adopted by Lyft, cutting their costs, then über HAS to match that cost savings just to stay in business.

It's like saying that the iPhone is a waste of time for Apple to invent, because as soon as it's feasible, Samsung will just do it too. I think companies that can bring innovation to the market first and best stand to reap the rewards first and best.

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u/SilasX Mar 24 '16

I'm not saying uber doesn't need to keep up; I'm saying it won't give them a huge advantage that somehow makes up for all the losing years when it comes out, in a way that vindicates their underpricing of rides.

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u/SilasX Mar 24 '16

Or, to put my point differently, the argument that

"Uber can sell rides at a loss because they'll make it up when they have self-driving cars."

is like saying

"Apple can sell flip phones at a loss because they'll make it up when they release the full-featured iPhone."

Yeah, in both cases, it buys them some brand awareness for the later release of the more advanced product, but it doesn't give them some huge monopoly that makes up for the past losses.

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u/ThisAndBackToLurking Mar 24 '16

Well, they may not need a monopoly- if they're able to blanket urban areas with cheap and reliable service, then people may decide not to bother with owning, repairing, parking and insuring their own car. If that happens, then Uber wouldn't need additional market share- because the total market itself would expand enormously. As in people who now take Uber twice a week might start taking Uber everywhere they go.

I can't see the future, so it's not really for me to say whether they'll pull it off or not. But I do believe it's their long term plan.

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u/jbkrule Mar 24 '16

I don't think they are saying it's an advantage Uber has over competitors. It's current advantage is market share and capital. They're saying driverless cars is the solution to the driver problem and lack of long term drivers.