Friday, April 24, 2015

Could Uber make Orbitz obsolete?

Uber is a company that gets people from point A to point B, as quickly, cheaply, and hassle-free as possible. Right now they're doing it with black car and part-time taxi services, and in the future they'll definitely add self-driving fleets of cars to the mix. They may own those self-driving cars, or they may not. I can see a future where Uber licenses their self-driving technology to car manufacturers for minimal cost. Or even for free, as long as Uber's service software is hard-coded into the car as a choice. As long as end-users use the Uber app to call the car, Uber makes money on it eventually.

Right now we think of Uber as a "intra-city transport" company, but as self-driving cars, especially high-speed self-driving cars moving in close formations to take advantage of fuel-efficiency gains, become more common the range of an Uber trip will potentially stretch much further. It's not inconceivable that users will summon a self-driving Uber to take them on a long, overnight road trip so that they're in a distant city by morning. A minivan with the middle and back seats taken out can easily fit a sleeping sofa. (I speak from experience on that point)

At that point, Uber cars will compete with Southwest and Greyhound for intra-continental travel. Short range will always be based on car travel, and coast-to-coast will probably be air-dominant, but there will be a mid-range trip length where it could go either way, especially depending on the particular consumer's sensitivity to price and personal time-value.

At that point, I can see a future where the Uber app asks for a destination and then presents consumers with competing itineraries, all provided by Uber. It can drive you directly from New York to Pittsburgh, or it can drive to you to the airport, arrange for a ticket, and pick you up at the other end in another Uber car. Point to point transport either way, just choose your trade-off between cost and time.

And what role is left for Orbitz or Priceline in this future? Well, hotels and other destinations, I guess. It's not like AirBnB will eat 100% of that market.

Obviously the same logic above applies to Lyft and other Uber competitors, if they think of it. It will be interesting to see which of these companies is first to strike a relationship with an air carrier.

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