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Is Uber a Good Example of Smart Technology Innovation?

UberUber is an American international transportation network company headquartered in San Francisco, California. It develops, markets and operates the Uber mobile app, which allows consumers with smartphones to submit a trip request which is then routed to sharing economy drivers.

 

The service utilises dispatch software to send the nearest driver to your location. The service provides a no-cash-payment solution that charges your ride directly to the credit card on file with your account. This has resulted in cheaper fares and quicker service in many cases for passengers.

As of 28 May 2015, the service was available in 58 countries and 300 cities worldwide. Since Uber’s launch, several other companies have emulated its business model, a trend that has come to be referred to as “Uberification”.

Uber was founded as “UberCab” by Travis Kalanick and Garrett Camp in 2009 and the app was released the following June to tackle the frustrating lack of taxi problem in San Francisco. The original pitch involved splitting the cost of a driver, a Mercedes S Class and a parking spot in a garage. The first prototype hit the streets of New York to test the service, initially with three cars and went live in San Francisco in 2010.

Uber raised $49 million in venture funds by the start of 2011. Beginning in 2012, Uber expanded internationally. In 2013 Uber faced competition from ride-sharing services like Lyft (which had been growing for about a year) as well as regulatory opposition in multiple markets including internationally. Later in 2013 California becomes the first state to regulate ride-sharing services, benefitting companies such as Uber and Lyft and strikes a deal with auto manufacturers to lower the cost of car ownership for drivers.  In 2014 and with 100 cities offering Uber car service globally, Uber experimented with a courier service called Uber Rush.

In 2014, Uberexperimented with carpooling features and made other updates. It continuously raised additional funding, reaching US$2.8 billion in total funding by the start of 2015. Many governments and taxi companies have protested against Uber, alleging that its use of unlicensed, crowd-sourced drivers was unsafe and illegal. It is estimated that Uber will generate $10 billion in revenue by the end of 2015.

With the recent introduction of Uber into major cities across Australia with over 9,000 drivers, the Australian Taxation Office has ruled that thousands of Uber drivers across the nation will have to register for GST by 1 August, which could mean the cost of rides taken by consumers on the popular ride-sharing service rises by 10 per cent. This applies to any driver regardless of how the amount of income taken in fares.

The Australian Taxation Office has confirmed that people who provide ride-sharing services such as Uber are providing “taxi travel” under GST law. The decision may be viewed as slap in the face for fast-growing companies such as Uber, which has long argued that it’s a “ride-sharing” service and its drivers are not taxi drivers, and, therefore, do not need to have an ABN and pay GST. Failure to comply with the ATO means drivers would incur penalties that would be significant. There are also issues around insurance for the drivers, and if a passenger is injured or killed during an ‘Uber’ ride/fare.

Should we reward this type of innovation? Or are we killing off an established industry? Are people safe? Should drivers be licensed? Is this a true example of smart technology innovation? This has recently been discussed in Australian media. A quick test of the service in Melbourne has me sold. What are your thoughts? If you want to trial this service, it’s easy to sign up and use, click on this link http://www.wikihow.com/Use-Uber. If you would like to share your thoughts with Hall of Fame Marketing, we would love to hear from you.

 

 

 

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