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Digital platform more than taxi service: Uber as app economy paradigm?

Uber’s significance may lie more in its being a data-rich platform that taps into unused human economic resources than in its role as a passenger pickup service

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Uber provokes strong feelings. Some see it as a symbol of a modern app-driven economy, but others see it threatening to destroy a business that is rightly regulated for reasons of passenger safety.

Uber’s head of corporate communications is David Plouffe, US President Obama’s 2008 campaign manager. The very fact that the car ride hiring company has a figure of such stature in such a role says something about its imperative to get its story across in favourable ways.

No photography is allowed at Uber’s headquarters in San Francisco, as a group of journalists from outside the US discovered on a visit on the eve of this year’s Dreamforce, Salesforce’s annual customer and partner event.

At Dreamforce itself, Uber’s founder, Travis Kalanick, came across well – as a thoughtful, somewhat shy individual. But during a “fireside chat” with Salesforce founder and CEO Mark Benioff, he had a story to tell that leant plausibility to the view of his company as the harbinger of a new wave of creative disruption sweeping across old industries.

For Uber has come to function  at least in the collective imagination of Silicon Valley and all its clones in other parts of the world (such as our own Silicon roundabout)  as more than just a provider of a convenient alternative to traditional taxis.

“Uberisation” has come to mean the data-driven transformation of any service, using otherwise untapped resources. In the case of Uber’s car ride service, the company uses mapping data to capitalise on a driver’s ownership of a car and holding of a driving licence to connect him or her to someone who wants a lift, has signed up to get lifts, and has a smartphone.

It symbolises the so-called new “sharing economy” that some even see as post-capitalist, germinating within capitalism a new, more humane economy. Our former Computer Weekly colleague, Paul Mason, makes such an argument in his book Postcapitalism, published this year.

Earning opportunity

In the fireside chat with Benioff at Dreamforce, Kalanick recounted how, in his view, the taxi system in San Francisco had been broken from the rider’s point of view, but was failing to give opportunities to working-class Bay Area people trying to do more than keep their heads above water. Here was an earning opportunity, he argued – people could top up their salary by doing about 10 hours’ driving a week.

At the heart of Uber, said Kalanick, is a philosophy that “celebrates the city” – in the first place, the city of San Francisco. The more people who use a service like Uber, the less traffic there will be, he said, so less pollution and fewer accidents. He pointed out that 30,000 people a year die in road traffic accidents in the US alone, adding: “What if it were zero?”

Plouffe made similar arguments before an audience of non-US journalists the day before Dreamforce began. The company is about “reducing cars on the road, reducing emissions”, he said.

Uber Pool, the car-sharing service, is particularly about that, he added. Uber operates in 330 cities in 60 countries but still “there are a lot of world cities that we need to go into to solve their mobility challenges”, Plouffe said.

The big picture, he said, was of a world where “people are moving into cities at a fast pace, but they don’t have money or the room to build new transportation infrastructures”. He said Uber can help with this by reducing levels of car ownership, getting people to share rides, and so on.

Like Kalanick, Plouffe also stressed the social benefit of drivers joining the platform to supplement their incomes: 56% of them were doing fewer than 10 hours a week.

He added: “There is not one stagnant market for taxis. Taxis tend to be in financial districts or near hotels. It is difficult to get around our cities – there are no or few taxis in suburban or low-income areas; they are not near subways, and so on.” So again, the service provides a social benefit previously unavailable, he said.

Uber as digital platform

Whatever the cogency of these arguments, there can be little doubt that even the keenest minds in our business IT community – or, more specifically, of the data analytics and business applications communities – do see the value in Uber and Uberisation.

Stephen Brobst, chief technology officer at Teradata, is one such. He told me in a recent conversation: “They recognised a need and met it very effectively. Uber is, in most cities, more effective, faster and cheaper than taxis. The cheaper bit I don’t necessarily like because it’s not clear to me that it creates a sustainable living for the drivers, especially when their insurance goes up because they are Ubering. I’d happily pay more for an Uber than a cab.

“But what they really did right was build a platform that can be used not just for a taxi service, but for grocery delivery and all sorts of other things. Building a platform is much more powerful than building a product.”

Ray Wang, founder and CEO at Constellation Research, added to this point when I caught up with him at the recent SAP UK and Ireland User Group conference in Birmingham. “The beauty of Uber as a platform is that it is an insight economy,” he said. “It’s a business model that takes data and brokers and re-brokers it.

“They don’t own the cars. They give the driver a sensor that works out the best, most valuable routes. It’s the basis of a logistics business. The supply chain information they are capturing is fascinating.”

And Ryan Smith, CEO and founder at Qualtrics, a Utah-based survey software company trained on enterprise customers, recently expressed this view pithily on a trip to London. “You know why Uber is a great service for me?” he said. “Because I don’t have pounds.”

It is hard to believe that Uber will continue to bear the weight of social and economic significance that is routinely imputed to it. At almost every conference I have attended this year, at least one speaker has cited Uber as revolutionary – because it is “disruptive”.

Wouldn’t it be good if we could think afresh about why disruption has come to be so valorised? That might also relieve Uber of some of its Zeitgeist significance, and leave it to get on with just being a successful company.

This was last published in December 2015

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Uber doesn't own cabs or has employees - therefore by old rules it's NOT a "passenger pickup service". Note that picking up passengers was long known before Uber but also wasn't a factor concerning taxi companies. Uber has changed that in a way somewhat similar to what eBay has done, introducing transparency and accessibility of seller's and buyer's reputation.
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