I've said this before but it strikes me as under appreciated that Uber's main enterprise value is their network of drivers and their logistical expertise in managing and coordinating that network. Once self-driving cars become mainstream, wouldn't that start to erode the value of Uber's critical dominance in this area? A generation from now if I'm choosing between self-driving fleets of cabs from Uber, Lyft, Google, Facebook+Ford, and some Tesla joint venture, wouldn't prices suffer significant downward pressures? The best operators can still make a nice profit but nothing like the monopolistic profits Microsoft, Google, and Facebook extracted from OS, search, and social which seems to be required for a sustained multi hundred billion dollar valuation.
There'd still be a lot to differentiate on if you remove the driver - car quality (nicer/bigger/quieter cars), speed of journey (who has the best routing algorithm that uses the most real world sensors to route around problems), the most cars (so your wait is shorter), the most reliable network (plenty of redundant cars waiting if yours breaks down), the best app features, and so on.
Removing the driver won't be the last innovation these companies do.
Google has an advantage over Uber in all of those respects though - more capital, more experience building highly-available services, better routing algorithms, better contacts with carmakers, owns both the OS that the app will run on and the map data that they use to navigate, etc.
All of that pales in comparison to the fact that google has a direct line to more users. They can auto update their apps and allow people to book a driverless car.
I'm not sure that a financial and operational network of automated transportation would be less defensible, or less of monopolistic opportunity than a social network.
EDIT: now to mention the unavoidable legal issues, which to a certain extent are similar to what Uber is already dealing with and "resolving" quickly according to reports.
Can you dump a ton of money into replicating Facebook and have it succeed? Google+ seems to indicate no. Since the value of a social network derives from my friends being on it also, some critical mass of us have to switch at the same time.
If Google dumped billions into a self driving cab fleet and offered me 30% lower prices than Uber, would I switch? Yes, probably. Do I gain any benefit from my friends being on Uber? No.
I'm not sure what the key characteristics of a great automated car network will be, but I think there will some differentiation in a way where the difference can't be made up by spending, even on the scale of which tech giants are capable. Probably some combination of price, availability, and infrastructure. Maybe a similar customer relationship to what the telcos have right now.
For example, what if Uber "builds" (finances and badges) their own car, and you really like it (no reason it can't still have a steering wheel). What if they are willing to enter a one year agreement where it is cleaned and parked in your driveway at 4AM every Mon-Fri morning to take you to work when you're ready. Or if they have a parking lot near your office with 100 cars where you can just walk up to any car, open the door, and go. Or if they have an automated electric vehicle charging network over the whole country. It will take a while to discover what really matters for a AI-car network.
Comments
I've said this before but it strikes me as under appreciated that Uber's main enterprise value is their network of drivers and their logistical expertise in managing and coordinating that network. Once self-driving cars become mainstream, wouldn't that start to erode the value of Uber's critical dominance in this area? A generation from now if I'm choosing between self-driving fleets of cabs from Uber, Lyft, Google, Facebook+Ford, and some Tesla joint venture, wouldn't prices suffer significant downward pressures? The best operators can still make a nice profit but nothing like the monopolistic profits Microsoft, Google, and Facebook extracted from OS, search, and social which seems to be required for a sustained multi hundred billion dollar valuation.
There'd still be a lot to differentiate on if you remove the driver - car quality (nicer/bigger/quieter cars), speed of journey (who has the best routing algorithm that uses the most real world sensors to route around problems), the most cars (so your wait is shorter), the most reliable network (plenty of redundant cars waiting if yours breaks down), the best app features, and so on.
Removing the driver won't be the last innovation these companies do.
Google has an advantage over Uber in all of those respects though - more capital, more experience building highly-available services, better routing algorithms, better contacts with carmakers, owns both the OS that the app will run on and the map data that they use to navigate, etc.
All of that pales in comparison to the fact that google has a direct line to more users. They can auto update their apps and allow people to book a driverless car.
Yes. Brands will have some value, but self driving rides are going to get commoditized very rapidly.
I'm not sure that a financial and operational network of automated transportation would be less defensible, or less of monopolistic opportunity than a social network.
EDIT: now to mention the unavoidable legal issues, which to a certain extent are similar to what Uber is already dealing with and "resolving" quickly according to reports.
Can you dump a ton of money into replicating Facebook and have it succeed? Google+ seems to indicate no. Since the value of a social network derives from my friends being on it also, some critical mass of us have to switch at the same time.
If Google dumped billions into a self driving cab fleet and offered me 30% lower prices than Uber, would I switch? Yes, probably. Do I gain any benefit from my friends being on Uber? No.
I'm not sure what the key characteristics of a great automated car network will be, but I think there will some differentiation in a way where the difference can't be made up by spending, even on the scale of which tech giants are capable. Probably some combination of price, availability, and infrastructure. Maybe a similar customer relationship to what the telcos have right now.
For example, what if Uber "builds" (finances and badges) their own car, and you really like it (no reason it can't still have a steering wheel). What if they are willing to enter a one year agreement where it is cleaned and parked in your driveway at 4AM every Mon-Fri morning to take you to work when you're ready. Or if they have a parking lot near your office with 100 cars where you can just walk up to any car, open the door, and go. Or if they have an automated electric vehicle charging network over the whole country. It will take a while to discover what really matters for a AI-car network.
Tell that to MySpace.