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Comment by VHRanger | Hacker News Reader

The main question, remaining unanswered, for Uber's success is if the network effects for Uber will be as powerful as for, say, Facebook. This is what they're banking on with the current loss leader strategy -- drive out the early competition to establish a long run profitable monopoly.

It's a basic result in industrial organization theory that the predatory pricing strategy generally doesn't work except in extremely narrow cases.

I personally think predatory pricing won't work out for Uber. Ridesharing is fundamtentally a local enterprise the way Facebook isn't -- I have most of my value from Facebook from relatives living far away from me whereas I do not care at all about Uber drivers or passengers more than 10km away.

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But if I fly to another city (or country), it's easier for me to just use Uber to get around since I have the app already installed, my CC is linked, etc. Not to mention, there's a higher probability that Uber will be in the new city than a less popular service.

And then you develop the habit of using uber so a new local service would have to offer something that Uber doesn't. That could be lower prices or more drivers coming more quickly. I suppose a new service could offer a better deal to the drivers to get more of them using it but it seems to me once this market matures the demand for rides side will dominate. No ride requesters on the app means fewer drivers will use the new app.

On the other hand it is not nearly as difficult to create a new local ride share service as create a new Facebook

How large is the total market for newly arrived travelers?

Significant. Business taxi expenses in the US are about $10B annually (which I believe includes related types of services). Presumably a pretty good chunk of that is business travelers who are not in their home city. Plus Uber and Lyft are apparently also taking some business from traditional car rentals.

$11B is the total taxi market in the US, and even if it were dominated by newly arrived travelers it's tiny.

Ground transportation is measured in trillions, which is the sort of market size a $70B company is expected to grow into. Uber should be grouped with self-driving cars and the auto industry, not with taxis.

https://www.forbes.com/sites/greatspeculations/2016/09/21/se...

Someone could still create a single app that plugs into many cities' existing ride services. It may not be as uniform an experience, but it saves the headache of downloading and setting up a new app for each city.

Yes, a ride share arbitration service would solve a lot of the problems. The question is, does Uber have enough market in enough places or enough of a name that they can resist fully tying into a service like that.

Think Apple. They have enough market share (even if not a majority), and enough brand loyalty, that they don't need to adhere to existing standards if they think they can resist them and use that to their advantage. Think iChat, and compare to the original XMPP google chat. It was trivial to talk to gchat friends on an iPhone, but hard or impossible to talk to friends over iChat from an Android phone. By resisting making iChat open, Apple created an advantage for iPhone users. Eventually Google redoes google chat with Hangouts, and guess what? They close the protocol. Sharing is only beneficial for you if it's reciprocated.

Does Uber have the clout or loyalty to get away with this? I doubt it, especially since the bar for drivers to drive for multiple services is so low. But if the arbitration service was created without provisions to account for this (e.g., you must partake in the system to use it as a provider), it would be trivial for Uber to fill gaps in their coverage through the service while preventing other apps from doing the same with Uber drivers.

I don't follow. I wasn't suggesting that Uber would be forced to tie into such a service, only that this would eliminate their advantage in that respect.

My point is that unless locked down correctly, and depending on the specific market conditions, a service like that could be used by Uber to their advantage. If the Uber app gives you rides from Uber or from other providers when an Uber isn't available, but the other app only does other providers, it's beneficial to use the Uber app instead of the other ones, and Uber can then provide better placement to their own drivers.

It's a common problem between open and closed systems in markets.

That would explain how Uber would mitigate some of the resultant competition, not why it would eliminate their "only need one app" advantage.

I think we are addressing slightly different things. I wasn't specifically addressing the concern of one app, but what that implies (the service that aggregates ride providers). A service like that does mean a single app might yield good results in the majority of situations. That lessens the advantage Uber has. I was just noting that Uber might still be able to play that into an advantage for themselves, so while it might lessen the advantage, it wouldn't eliminate it, in that case (since Uber's app would always be at least as good in that scenario).

Is there no Hangouts app for iOS?

There is, but it's completely controlled by Google now. It's not integrated into an app that can offer multiple chat systems as it could be previously, and they can control exactly how it's used since they control the app.

> Someone could still create a single app that plugs into many cities' existing ride services

Probably called "Google".

if you fly to another country, you will be subject to roaming fees. In that case, it maybe easier to just hail a cab depending on which country you are in

Only if you're a sucker and pay big bucks to a shitty US carrier.

EU got rid of roaming.

There are carriers in the US that offer flat rates in all supported countries (like Google Fi: 135+ countries at time of writing).

I'm based in the US, I lived in Brazil for several months last year. I stayed with Fi, still paid 10$/gb and 20$/month for unlimited voice/text, kept my number, and immediately had data access.

As a side note, Uber was there, and we used it frequently.

Not on T-Mobile...

Or Google Fi.

I've recently tried Lyft - at airports and downtown areas it's fine (10-15% cheaper than Uber), but in some more suburban areas the wait times (compared to Uber) make it unusable.

I.e. where the smallest segment of their market goes.

I have your same problem. But I don't think it's a problem for them.

>The main question, remaining unanswered, for Uber's success is if the network effects for Uber will be as powerful as for, say, Facebook

They are incomparable. Facebook has an inbuilt virality and stickiness. It only works because your friends are using it too. Uber has none of this. All their growth will be for nothing as soon as they run out of cash and stop subsidising the market.

Uber (and other companies in its category) certainly have a network effect locally. (It's generally a better service for everyone the more drivers and riders there are in a given area.)

Across cities though the effect is more like any other type of chain (habit, familiarity) although admittedly having the app installed and payment info linked is a potentially wider moat than familiarity with Starbucks is. (Or not. Brand loyalty is pretty powerful too.)

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