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Comment by empressplay | Hacker News Reader

Isn't Uber's entire business model (and its ridiculous valuation) based on the idea that they were going to become a monopoly? (and thus recoup the huge investment costs by raising fares?)

I can't see them accepting a competitor in the long term. A competitor will keep margins slim and the VCs invested in Uber won't be very happy with that. I wouldn't be surprised if Uber ups the ante and cuts fares to absurd levels in order to try to drive Lyft into the ground.

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They lose millions of dollars a quarter still. I don't see how Uber can dominate the market in the long run, when they'll have to raise prices to a profitable level and thus make it easier for competition to undercut them. Drivers can work with multiple services at the same time, and the barrier for consumers to install another app or navigate to a web app is pretty small.

edit: If the regulatory environment doesn't clear up, though, I could see that making it easier for Uber to dominate the market. They have the wherewithal to challenge regulators in courts of law and public opinion, and to comply with whatever red-tape is imposed on them. New entrants would have a much harder time.

I believe that in the markets they've been in the longest, they're profitable. It's expanding to more and more markets that makes them unprofitable on the whole.

They can still become an absolutely massive business even with slim margins if the market is big enough. Look at Walmart.

But isn't Walmart's success just the classic example of economies of scale? While there are obviously some economies of scale in Uber's business, I would expect them to be far less significant than in Walmart's business.

They will kick the drivers to the kirb when auto driven cars are available. Currently they are just getting the people trained to use apps for calling taxis.

I feel like the bet with uber is more a future reduction in cost by autonomously driven cars which will also increase the market size

But do you think the strategy of cutting fares could actually work? I wouldn't think so. It appears that investors are willing to fund the second largest player now, and I see no reason that wouldn't continue for at least as long as Uber's investors are willing to throw money at them to subsidize fares.

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