Review of Uber’s innovation and diversification

Figure 1. Structure of a business model according to the St. Gallen University.

Let’s have a look at how Uber would answer these questions.

Uber offers its service to two types of customers:

1. 
   people who offer
   
2. 
   people who want a ride.
   

The requirements to become a driver are straightforward: a clean criminal record, a newish car and a mobile phone. To get an Uber ride, customers simply need to download the Uber app, register, and provide credit card details.

Uber’s value proposition is in providing a highly flexible source of income for people who own a car. Drivers can determine when and for how many hours they work.

The value proposition for passengers is in:

• 
  cheap, undercut market rates
  
• 
  a wide network of drivers
  
• 
  real-time information on where their ride is
  
• 
  automatic credit card payments.
  

Then Uber creates value internally by not having to deal with:

• 
  servicing and maintaining a fleet of taxis
  
• 
  rent
  
• 
  call centre agents
  
• 
  administration
  
• 
  parking fees
  
• 
  recruiting and training drivers and issuing permits.
  

This all means massive savings in fixed and variable costs.

Uber makes money by charging a commission of up to 30% from the drivers. Uber uses an automated algorithm to adjust prices and influence supply and demand in the market, resulting in significantly higher fares at times of high demand. 

Looking at all this, it’s clear that Uber is not a taxi company – it’s an online platform that connects people. And that’s not new either. The peer-to-peer business model is used by many organisations, including eBay, Trade Me, Airbnb, and essentially every dating service.

Technology itself is seldom disruptive. If your industry is going to be disrupted, it’s going to be by legacy technology combined with a trivial, but effective, business model.

3. 
   Uber’s Innovative self driving car
   

Uber first announced its intentions to amass a fleet of automatic cars in February 2015, which happened to be the same week that Google announced its own interest in autonomous car technology. (Pay attention, kiddos, for this is important later on.) Shortly after, Arizona Governor Doug Ducey invited Uber to test its cars in the state.

Initially, though, the project kicked off in Pittsburgh, Pennsylvania, where Uber had hired a bunch of researchers from Carnegie Mellon University and helped revitalize Pittsburgh’s Strip district with the opening of the company’s Advanced Technologies Center.

Uber’s initial fleet included 20 Ford Fusions, which seemed like a whole armada back when autonomous cars still felt like science fiction

By introducing and using self driving cars Uber is planning to somehow get rid of drivers and by this way earning more revenue.

It is said that Uber gets only about 30 per cent as a commission of one ride while drivers get other 80 per cent.(figure 1) This certainly shows that Uber does not make so much profit. And Uber’s taxi sharing platform is more or less dependent to drivers so that Uber does not have full control of its business. If the self driving cars are applied by Uber then all the revenue goes directly to the company.

The following is one of the examples of how much Uber receives from a ride.(Figure 2)