The question is how much of a monopoly uber can build once they shift to profit extraction. There is little evidence that their customers are sticky against a new competetor willing to accept a lower rate of return.
People stay with Facebook because that is where all their friends and family are, but do they have the same lock-in with their rideshare provider? It is an open question how much of a network effect exists in this market. My gut feeling is not much, but others obviously disagree with me. Uber could win the battle and lose the war.
Similar to selling & buying on eBay, though maybe not quite the same since both sides can be on multiple apps at once.
On the consumer side, having the most cars available is not the only thing to consider. There's also price. For me, Uber is the first app I check (mostly out of habit), but if there's any sort of surge pricing going on, I'll check Lyft. If Lyft doesn't have a similar surge, I'll usually ride with them, even if it means a slightly longer wait.
If I was going to take on Uber I would wait until they IPOed and then build out a business based on local dominance in secondary markets where I would concentrated on getting the transport and maintenance costs down as much as possible. I would lobby the local governments to make life difficult for Uber while promoting the “local hero”. Done well this strategy would be hard for a large player like Uber to fight.
I think in major cities, both Uber and Lyft are becoming commodities - both of them have ample enough supply that I just choose the cheaper option.
As a rule don’t complain about being downvoted - it just brings you more downvotes.
> Uber is a marketplace. Facebook is a social network. Craigslist is a marketplace. Uber's network effect works the same way Craigslist's does, and is not so much similar to Facebook's network effect.
I don’t have the figures for the USA, but here in Australia the rate people empirically use to avoid tolls is $12 per hour (i.e. they will sit in traffic for an hour extra to save $12 in tolls). Assuming people apply the same thinking to ride sharing, then a cheaper competitor with worse coverage should be able to capture a reasonable share of the market.
Once driverless vehicles are brought in to the market, presumably these dynamics change again.
A third variable is the device which retrieves a vehicle. Google & Apple, the platforms where presumably almost all Uber vehicles are called from (not sure how many people are using the SMS feature or if it is still functional), are both working on producing vehicles. The current assumption is at least Google's will be self driving from day 1 and both may operate in a manner more like Uber than a traditional automobile business model.
There is a lot more certainty around how transportation will look, in general terms, by 2025 than who will be collecting the profits from it.
The second way a competetor could undercuts Uber is by accepting a lower return on capital. Uber's cost of capital is very high compared to the cost of capital in the utility industry. It will be very hard for Uber to compete long term against a rival with low cost capital.
My expectation is Uber will win the battle against its venture backed rivals and will lose to a new competetor optimised for running and capital costs.