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Why I don't believe in Uber's Success

blog.benjamin-encz.de

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Re: Why I don't believe in Uber's Success

#91

Post by mcguire »

alexlatchford wrote: post #19

The potential for autonomous point-to-point freight shipping should pay off sooner than it's consumer business, allowing it to reduce it's investment requirements. Debatable on the timelines though. You assume though that the network they've built up isn't valuable when you talk about self-driving vehicles. I agree the car tech will be commoditised and to my mind Uber owning their own fleet isn't the best option. It'…

What prevents other logistics providers from driving the price down to commodity levels?

Re: Why I don't believe in Uber's Success

#92

Post by CoffeeDregs »

vannevar wrote: post #69
CoffeeDregs wrote: post #52

The commercial airline industry has lost money over the whole of its existence. If I'm flying from NYC to DAL, I'm flying the cheapest carrier (with a slight nod to Frequent Flyer programs). I'm not sure how Uber, Lyft, etc are any different than Southwest, American, etc. Cab companies (which I hate) and airlines saw this years ago and promoted regulations to protect their fees (and, thereby, wages). Airlines lost th…

The commercial airline industry has lost money over the whole of its existence. That is clearly not true. See, for example: http://www.iata.org/pressroom/pr/Pages/2016-12-08-01.aspx If I'm flying from NYC to DAL, I'm flying the cheapest carrier (with a slight nod to Frequent Flyer programs). It's true that many people bargain hunt, but the people that don't (primarily business people who need to fly on short notice a…

    That is clearly not true. See, for example: [Industry publication]
A clarification: I meant that if you would show a net loss if you summed the net income of each airline in the industry since inception.

To be fair, while it definitely isn't clearly not true, my statement certainly is not clearly true... ;) Some non-industry pubs backing my not-clearly-true statement:

http://faculty.haas.berkeley.edu/borenste/download/AERPP11Ai...

http://www.investopedia.com/stock-analysis/031714/why-airlin...

https://priceonomics.com/can-airlines-make-money/

Re: Why I don't believe in Uber's Success

#93

Post by niftich »

CoffeeDregs wrote: post #52

The commercial airline industry has lost money over the whole of its existence. If I'm flying from NYC to DAL, I'm flying the cheapest carrier (with a slight nod to Frequent Flyer programs). I'm not sure how Uber, Lyft, etc are any different than Southwest, American, etc. Cab companies (which I hate) and airlines saw this years ago and promoted regulations to protect their fees (and, thereby, wages). Airlines lost th…

Let's forget about aviation flag carriers and the 'orthodox' legacy US airlines for a moment. How do 'low-cost' airlines make any money, especially in Europe where they advertise fares for paltry amounts? Even with charging extra for bags, food, early boarding, decent seating, etc., does the money they make per passenger cover fuel costs and landing fees alone or is profitable in any sense of the word? What are the business incentives in entering this market, then?

A hypothesis is that low-cost airlines often fly to lesser-known airports further away from popular cities and extensive hub operations; airports which have a difficult time attracting orthodox airlines for these reasons. Therefore, such secondary airports compete against each other to attract carriers, because without a commercial carrier the utility of the airport greatly diminishes for the residents of the immediate area, who may demand to redirect government funds to other expenses.

But if an area can retain its airport with commercial service, multiple fringe benefits result: local businesses will be patronized by air travellers even if just to get to the major city of their choice, and the area's profile will be raised on a national level which may make it more attractive to businesses and discretionary residents.

Therefore, we can assume that some amount of government subsidy finds its way into the pocket of low-cost airlines that choose to serve a particular airport. I posit that local governments face similar pressures with regard to improving accessibility to metropolitan points-of-interest and a large-network provider like Uber may be able to offer a solution at a price the government is willing to pay. This has already happened in New Jersey [1], and I expect to see more of this in the future.

[1] http://www.theverge.com/2016/10/3/13147680/uber-new-jersey-f...

Re: Why I don't believe in Uber's Success

#94

Post by josu »

earthtolazlo wrote: post #53
ahuja_s wrote: post #21

I live in Singapore and Uber is a little cheaper than the excellent cab services which operated here even before Uber. There is a big competitor to Uber here called Grab. I switched to Uber because their service is good, drivers are gracious and cars are nice and they give me good offers. Last year I took 300 Uber rides, never once taking the usual Comfort Delgro Cab because their drivers suck. If prices were the sam…

It lost 2-3 billion dollars last year and shows no signs of improving its margins anytime soon. How is that a success?

They created a product that people love. I live in Mexico City and my experience is similar to the one described in Singapore plus the fact that, so far, nobody has ever been kidnapped while hailing an Uber.

Riding a cab has gone from slightly dangerous and more often than not displeasing experience, to having a private driver that knows exactly where I want to go and how to get there. Besides, not having to use cash is a great plus as well.

So there you go, maybe not in the US, but in many countries where the taxi industry totally sucked, Uber has already succeeded big time.

Re: Why I don't believe in Uber's Success

#95

Post by dageshi »

vannevar wrote: post #80
avn2109 wrote: post #68

Earlier quoted context omitted.

TFA and a lot of commenters here don't seem to understand that Uber doesn't want to compete with taxi services, which are a niche business to be disrupted en route to the real prize. It wants to compete with your car - imagine 12 lanes of L.A. traffic composed mostly of Ubers. That's their dream. They even admit this in public. [0] The day they can get cost per mile one penny below what you'd spend owning a Toyota Ca…

This is a good point, but it doesn't change the prognosis. Uber will run out of runway long before that vision can be realized. And even if by some miracle it doesn't, it will find itself in a low-margin commodity business. Unless it can muscle its way into a monopoly, it can't win. Which explains the company's aggressiveness and anti-competitive nature.

Amazon is in a low margin commodity business with massive amounts of competition, but they're still massive and becoming even bigger because they do what everyone else can do just that little bit better that there's no real reason to switch away.

Re: Why I don't believe in Uber's Success

#96

Post by jc_811 »

I agree with this, however I don't agree with the author's take on the self driving car part. He says:

> Let’s assume that we will see fully autonomous vehicles that can navigate city traffic in the near future [...] If this technology becomes available, I doubt that Uber will have a monopoly on self-driving car technology.[...]I think it’s safe to say that many companies will have access to self-driving car technology.[...]In this scenario I don’t see how Uber can generate reasonable profits

In the ideal 'future' society, everyone will have a self-driving car they can order to pick them up wherever they are. This would drive Uber out of business. However there will be a whole taxi industry for performing this service when someone is outside of their own city.

I believe the taxis of the future will be there to assist someone in one of two scenarios:

1.) Someone in their own city who doesn't own a self driving car

2.) Someone who is in a city different than their own

I still think there will be plenty of business in the above scenarios - and Uber is positioning itself to be the industry leader/titan. It's definitely a huge gamble since predicting the future is impossible at worst, and extremely hard at best; but we'll see if Uber can stay afloat long enough to reach it.

Re: Why I don't believe in Uber's Success

#97

Post by xemdetia »

Keyframe wrote: post #61
ithinkinstereo wrote: post #49

Earlier quoted context omitted.

> Question is, who are competitors with same scope as them? I don't know any. Presumably traditional car manufacturers (GM, Ford, Toyota, BMW, etc.), upstart car manufacturers (Tesla), and even other large tech conglomerates (Google, Baidu, etc.). > They are already in position to just switch over. Others would have to build their network first. It's a running start that depends on them playing their cards right. Ube…

Why aren't car manufacturers already in logistics business? Or are they? I'm trying to find sources. I see VW has its own logistics group, but only for their own use.

In the US at least (I haven't ever bothered to look at how branded car dealers exist outside the US), they already have a network of physical locations where they can ship anything and service anything they sell. There are also the rental agencies and the people that manage fleets of private vehicles that work directly with the local dealers on behest of the global organization- Uber doesn't have this and would have to build it. Right now they are pushing that part of the logistics of their organization on their drivers since it is their own personal vehicle.

This is something you can see Tesla having to do the hard way in comparison with their coast to coast supercharger network. There was no physical infrastructure to support their product so they had to build it, and established car dealers already have it which is part of why Tesla overcoming that was such a challenge. If I have a US make car in the US and I am in a moderately populated area I can make a reasonable assumption I can get to a dealer in an hour or two wherever I may be, and Uber would have to overcome that.

Re: Why I don't believe in Uber's Success

#98

Post by username223 »

hmate9 wrote: post #78
Animats wrote: post #71

Here's a table of Uber's funding rounds.[1] What's keeping Uber going is Saudi Arabia's sovereign-wealth fund, which put in $3.5 billion last summer. They also took on $1.15 billion in debt last year. That's real debt at 5% interest, not some convertible deal. Bloomberg says Uber is losing $800 million per quarter.[2] Unless they can find a bigger sucker than the Kingdom of Saudi Arabia, they run out of money in 2018…

$800 million / quarter = $103 / second. Wow.

Wow, indeed. They're lighting 445 kg of $20 bills on fire per day. That's probably enough to stay warm at the South Pole.

Re: Why I don't believe in Uber's Success

#99

Post by iaw »

Finally someone is saying it loudly. I've tried to make this point in the past to no avail. If Lyft can hold out they may survive over the long-term, but the strategies that allow Uber to be dominant will also prevent it from being profitable while maintaining market share.
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