Tagged under Mobile, Industry Analysis
Innovations and changes in technology standards usually drive innovative changes that lead to a better experience for the consumer. Through this change, some industries that are otherwise stuck in the pre-technology era of operations are forced to take notice, reevaluate their business models and improve their functionality and services, in order to keep up with the new innovations from competition and to stay in business.
Without this innovative and revolutionary thinking by some, none of our user experiences would improve and they would remain in the dark ages of pre-technology. Today, well known companies such as Apple, Amazon, Netflix, Square and YouTube are part of our everyday lifestyle that we can't imagine functioning without. But, as recently as 5 years ago some of these didn't exist or were considered to be risky startups that were taking an innovative approach into an industry that otherwise didn't exist or existed under a different set of rules. Their innovative approach to business and services sparked a slew of new types of companies that now exists solely because of the new industry concept and approach. It also forced industries and companies that otherwise would have remained unchanged to step up their game to compete or shut their doors forever. In other words, by creating better products and services for us, they drive and force others into change (and hopefully innovation).
Just like these companies, Uber is at the forefront of such innovation and industry change. The company is now completing its next round of funding for $1.4 billion, and now valued at $18.2 billion, but didn't even exist 3 years ago. A Silicon Valley start up that took its origins in offering a luxury cab service geared around a mobile app, is now offering all around taxi services all over the world and causing the outdated taxi service providers to take notice and rethink their operations that have been stagnant for over 100 years. These incumbents must come up with their own version of consumer friendly technology oriented services that competes with Uber in order to stay in business.
Uber, who claims to be adding 20,000 new jobs every month and has a company mission of turning “ground transportation into a seamless service and enable a transportation alternative in cities that makes car ownership a thing of the past" doesn't have it easy. For starters, many are criticizing their “dynamic pricing model" that adjusts the fare rates based on the demand of service by increasing rates during the periods of extreme demand. Others are accusing the company of operating under the radar of existing taxi laws, stealing the competition's drivers, and price gouging. Most of this criticism and bad press is generated by those holding an interest in the old-school taxi industry, an industry that is heavily “regulated" by the government and operates under what I would classify as a “mob" or “cartel" type of approach. Despite the existence of multiple competing taxi companies in every city, they all stick together, determine pricing structures and hold the market hostage under their rule.
Because of companies like Uber, who are coming into their new markets and offering consumers a better and easier choice unaffected by miles of red tape and unethical operations, old-school taxi companies are now scrambling to find ways to compete with this new business model, hoping to keep their slice of the market and stay in business.
In the world of innovation, who is being hurt? Those who have failed to adapt to new demands of the market and technology on their own. Companies who have been happily growing by making easy money through their own price fixing, under the table deals and holding consumers hostage to their own comfortable ways. With technology being at the forefront of everything, I hope more old-school companies will start to take notice and start offering consumers better experiences not out of necessity and the pressure from competition, but because it's the right thing to do. Otherwise, in another 5 years, no one will ever care that one day they even existed.