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Smartphones Will End Taxis

The century-old taxi industry is on the cusp of disruption. Blame it on the smartphone and a set of exponentially improving technologies like sensors, big data, and the cloud. The disruptors are ‘ridesharing’ companies like Uber and Lyft.

The explosive user and revenue growth of these ridesharing companies indicates that they are solving a real market need. Uber, a San Francisco-based ‘startup’ founded just five years ago, collected more than $1 billion in rides in 2013 and recently raised $1.2 billion at a pre-money valuation of $17 billion.[1] [2] Uber’s CEO said that the company is doubling revenues every six months.

The main problem is that the current taxi system is inherently inefficient. In New York City, drivers spend nearly half their driving time looking for a passenger.[3] The time taxi drivers waste is literally wasted money. The median taxi driver in the United States makes just $22,840 per year, according to the Bureau of Labor Statistics.[4] Potential passengers may not be where the empty taxis are and are left feeling like they are waiting forever for a taxi. This is exacerbated when potential passengers are not in the city center and business districts that tend to attract most taxis. Hard-working drivers and frustrated users are unhappy because they both waste precious time finding each other.

Ridesharing companies essentially provide technology to make the process of finding each other more efficient. Getting a ride now is as easy as picking up your smartphone and clicking.

The modern taxi industry was born in 1897 as Gottlieb Daimler sought new markets for his new internal combustion engine (gasoline) automobile. [5] Since then, the industry has improved its service offerings by adopting technologies such as the taximeter, the two-way radio, and the landline telephone. All of these technologies are more than a hundred years ago. All of these technologies were eaten by the Internet years ago. The taxi industry has fundamentally not changed since the Great Depression. They are now competing with well-capitalized companies that are taking advantage of the latest technologies that include not just the smartphone, but also exponentially improving technologies like sensors, machine learning, big data, and the cloud.

Taxi companies who choose to ignore ridesharing are essentially choosing to be disrupted. Furthermore, the ridesharing disruption is just one of several disruptive waves that will fundamentally change public and private transportation over the next fifteen years.

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  1. I think people over-depend on and over use their smart phones.

    Why in the world would you want to watch Avatar with Dolby 5.1 surround sound and all those 3D special effects on a 2×2 screen?

    What about the smart phone web surfing experience makes one forget all about his/her laptop or tablet?

    Since when were the photo taking and editing capabilities of a smart phone superior to that of a digital camera and photo editing software?

    Now… a claim that the smart phone will end taxi service?

    Hopefully, it will end taxi service AS WE KNOW IT. Here in San Francisco, the taxi companies and drivers have held us all hostage for YEARS. Then along came Lyft, Uber, Homobile and other personal transportation services (PTS), or ridesharing organizations. They burst onto the scene with apps to contact an available car directly, a GPS function to see where the car picking you up is currently located, the ability to book your “regular driver,” trip cost estimates, etc. ALL WITHOUT HAVING TO SPEAK WITH ANOTHER HUMAN BEING!

    So the taxi companies struck back, as it were. They came out with apps to book taxi service, estimate times of arrival, view the current queue, etc. With these, a more consumer-oriented taxi company shadow was cast.

    So far, that’s about it from the “old skool cab companies.” Uber and Lyft are still cheaper (they charge by the minute and don’t have a nearly $5.00 drop fee which applies before the cab is even in DRIVE.) PTS’s are usually a lot faster than regular cab companies. (In a recent experiment, Uber was able to get customers to the hospital faster than the ambulance services dispatched by calling “911.”) Of course, there is an obvious drawback to non-EMS transportation –the absence of EMERGENCY MEDICAL SERVICE. But have you seen an ambulance bill recently? You could take a stretch limousine and save $1,000.00

    It’s high time Yellow Cab got a run for its services. Thank goodness they’re no longer the “only game in town.” And thank goodness for smart phone apps which have forced them to raise the bar on an old fashioned thing called customer service.

    Comment by Sam French on April 18, 2015 at 3:38 pm


  • Tony Seba AUTHOR and THOUGHT LEADER Tony Seba is the author of Clean Disruption of Energy and Transportation—How Silicon Valley Will Make Oil, Nuclear, Natural Gas, Coal, Electric Utilities and Conventional Cars Obsolete by 2030, Solar Trillions—7 Market and Investment Opportunities in the Emerging Clean-Energy Economy and Winner Takes All—9 Fundamental Rules of High Tech Strategy. EDUCATOR ... more

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