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March 27, 2017

What is Uber?

Uberisation seems to be taking over - CBR looks at the one app that started it all.

By Ellie Burns

Uber is a transportation network company, well-known for its ride-hailing taxi app.

The company has since become synonymous with disruptive technology, with the taxi app having swept the world, transforming transportation and giving a different business model, dubbed uberisation, to the world.

The pick-up location on the Uber journey started in 2009, when Garrett Camp and Travis Kalanick founded ‘UberCab’, the first iteration of today’s popular app. Interest was seen early on, with the company receiving $200,000 seed funding in 2009, adding an additional $1.25m funding in 2010.

Following a beta release in 2010, Uber officially launched in 2011 in San Francisco. By the end of this year, an astonishing $44.5m had been raised in funding and the company had made the move to today’s Uber moniker.

What is uber

From that initial launch in San Francisco, Uber started its global take-over, expanding to a new US city every month from May 2011. Its first international launch was Paris in 2011, quickly followed by Toronto, London, Sydney, and Johannesburg.

Today, Uber is available in over 60 countries and over 400 cities worldwide. The driving force behind this expansion and adoption was, of course, the technology and the business model.

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Taking the first core element, technology, Uber relies on app software and smartphones. Put simply, you install the Uber app on your smartphone, set a pick-up point and destination from a map and then tap to request an Uber driver.

You have a choice of cars ranging from standard to luxury, while the driver’s name, number plate and car are visible when they are on their way. Due to the GPS and map capabilities of the app, you are given a fare estimate, estimated time of arrival and shown the route the driver will take. In short, everything is transparent.

At the end of the trip, there is no need to hand over any cash as payments are taken from debit or credit cards stored in the app itself. There are also other additional features such as splitting fares with friends, connecting your smartphone music playlist to some car stereos and sharing your route with family and friends.

 

How are Uber fares calculated?

When it comes to Uber fares, they boast some of the lowest around. Similar to metered taxis (although this is a point of contention to other taxi drivers) all hiring and payment is handled by Uber and not with the driver. In some cities the fare is based on distance, in others it is based on time.

Uber also deploys an algorithm which calculates fare increases based on rapid changes to supply and demand in the market. This could be bad weather or an event or incident like the London tube strikes. Although customers receive notice that surge pricing is in effect and to expect increased fares, the practise has caused criticism from passengers.

Uber drivers can set their own schedule and work as much, or as little, as they want. Drivers rely on the app for directions and route, a complete contrast to Black taxi drivers who must complete the Knowledge. Becoming a driver is as simple as passing a background check – other than the obvious age, ability to drive and health requirements. Both the device and car can be leased. Earnings are deposited into drivers’ bank accounts every week, while a number of discounts and rewards are also on offer.

Uber Surge Pricing

Uber is now valued at over $62 billion – all built on an app providing peer-to-peer transactions between clients and providers of service. This business model has been copied by businesses outside the transportation market such as AirBnB, Tudou and Gett.

However, for all its benefits Uber has received huge amounts of criticism – criticism which has seen protests around the world. Competing taxi drivers, taxi companies and governments argue that Uber drivers are untrained, unlicensed and uninsured which puts passengers in danger. It has also been argued that because Uber does not pay taxes or licensing fees it is unfair competition to other taxis.

However, these protests and challenges of legality have not stopped Uber – the company is now looking into self-driving car technology, launching new initiatives like UberPOOL and looking at ways to accommodate drivers and passengers who are disabled.

 

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