Comment by emilsedgh
2 days ago
Why is Uber's price not affected by Waymo is a puzzle to me.
I use Waymo's all the time. There are still some quirks they need to figure out and polish the experience, but it really is happening and it appears that Uber's head is in the sands or I'm missing something here.
Scalability? Waymo is operating in a handful of carefully chosen US cities. Uber can probably open in any city in the world (within reason) with probably a few weeks' effort.
I agree with your underlying premise that in the (very) long term, all taxis will be automated; I guess the gamble for investors is how long that transition takes, across the globe.
I wouldn't touch Uber stock, but the PE ratio is only 15. My guess is the market is expecting them to be able to still grow in the next few years even if they eventually face tough competition.
I think there's also the fact that if self-driving cars take off and price goes down, people will ultimately rely on taxis/delivery more than ever. Maybe there is a place for Uber to be the platform for that still, maybe not.
Uber also has a delivery business. Uber Eats and Uber direct.
> Waymo is operating in a handful of carefully chosen US cities. Uber can probably open in any city in the world (within reason) with probably a few weeks' effort.
This. Uber can operate anywhere that has human drivers and cell service. Waymo needs (I think) high-precision maps that are frequently updated, and simple traffic behavior.
Traffic in Lima looks like absolute chaos to an American, with endless honking and lane markers treated as vague suggestions, but there are not constant crashes, because the (mostly professional) drivers know the local conventions and communicate with each other by horn, eye contact, hand signal, etc. Huaraz is full of blind 4-way intersections with no stop signs, so drivers honk as they get close to one, and there is a remarkable lack of fiery death.
Waymo can't work in most places until it either changes human driving, or achieves AGI. Uber works as soon as it can pay local drivers.
So you're saying Waymo can't scale because traffic in Lima is chaotic? That feels like saying cars won't scale because many rural villages don't have roads smooth enough for cars, and that horses can deal with that problem just fine.
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Waymo and Uber have partnerships in some cities, like Phoenix, where you can only order a Waymo through the Uber app. So they don't view each other only as competitors, though I have no clue what Uber's thinking long-term.
I've heard this argument again but just because you can hail a Waymo through Uber doesn't mean Uber can continue as-is. In a world where Uber is just the app, Uber's margins would be extremely thin and it wouldn't justify the market price it has now.
Also, why would Waymo, in the long term, use Uber for this?
They have the car, the driver, the app/software. They are not gonna share a big chunk of the profit with Uber in long term. The current partnership is probably just a tactical thing for both, not a strategic one.
I always assumed waymo would immediately kill uber, but really the likelihood is that there will be multiple self driving companies as well as human drivers in markets. A big city may need 2000 waymos most of the time, but 5000 waymos on a saturday night or when a big game is on. Google can either build 2.5x as many as they need, or they can keep other operators in the market to make the service more functional during peak times. It is likely that other operators will bring cars to market, and a unified app with different self driving providers will bring better service than any individual provider.
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There could be a stable long term arrangement between Waymo and Uber. Think of the relationship between Nvidia and OEMs, where Nvidia gets all of the margin and only has to deal with B2B bulk orders that they can redirect at any time, while the OEM has to deal with all the expensive customer support, returns, recalls, and other annoying aspects of retail.
It's not a future where Uber is a viable company though.
Perhaps. Or it may be that Uber sees its long term future as lead gen and management for people/goods transportation, and Waymo sees itself as fulfillment of those.
Uber has tremendous brand recognition and marketing in ways that Google has never been good at. I don’t think it’s the most likely outcome, but I would not be shocked to see Uber take an minority ownership stake in Waymo, use it as the preferred self-driving option, and phase out human drivers in many areas over the next 10 years.
The app isn't the important part of that partnership, it's that they're managing and operating the fleets.
How is Uber subcontracting a ride out to waymo really any different from subcontracting out to a gig worker? It's not an Uber employee or an Uber owned or maintained car in either case.
Maybe winning a finders fee is more profitable, Uber isn't high margin to begin with.
Small correction: in Phoenix you can also use the Waymo One app directly. In both Austin and Atlanta though, we are only available via Uber.
In the partnership model Waymo charges uber for the ride and Uber charges the customer.
The interesting thing is that uber loses money on every ride. Waymo charges Uber more than Uber charges the customer.
On Uber’s side, though, this is preferable to losing the entire ride. Uber loses much more slowly by controlling the distribution and losing a few dollars per ride than by losing the entire customer base with no revenue from these customers.
This is true. Then again Google used to power Yahoo!'s search and then ended up replacing Yahoo! as the default web destination
Uber eats and other diversifications. Unlike Lyft, which refused to diversify, which I always thought was a strange choice especially once the pandemic hit, Uber not only the dominant player but also diversified enough where it will most likely still be the #1 player, with the second seat now being Waymo. Based on how Waymo scales from city 1 to city n, it is extremely hard for them to do 100 cities at once. And international expansion will be almost impossible. Uber will still continue to dominate those markets.
The thing people miss about Uber is that Waymo doesn't need to scale to 100 cities at once to eviscerate Uber's ride hail business. They need to win the couple dozen largest cities that make up the vast majority of Uber's profits. The rest of the world drives less volume and costs vastly more to service when you account for things like regulatory compliance, internationalization, payments, and support.
Lyft is slightly diversified with bike rental in a few cities, although that's only a small fraction of their revenue.
My hesitation to use Uber is rarely about price. It's about the miserable experience of having a driver who cancels or never shows up. Prices bumping up or down 20% doesn't move the needle.