Uber has what's pretty close to a monopoly in what it offers, apart from a few cities in the US where Lyft also operates. I would say most people that user Uber are not interested in using the regular local taxi service.
This reputation is definitely damaging, and it's common knowledge here. Drivers bitch about it. They recommend Lyft.
But like, Uber is in 230 cities around the world. Here in Australia I believe they added over 1000 new drivers over the past month. Here, Uber is the alternative. There is no Lyft or Sidecar - mainly because alternatives are too scared of legal action from government - ridesharing is essentially illegal here, but Uber plays the we're-waiting-for-the-law-to-catch-up card regardless.