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iPhone App Makes the Taxi Cab Experience More Tolerable, Less Lethal

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Disregarding the unreliable service, overcharged fares, and terrifying drivers, the taxi cab experience is a completely pleasurable one. Who cares about the hour it takes to hail one or the near-death experience that follows? At least you got a ride, right?

Internet service Uber is operating on the assumption that the experience can be better. Much better.

The way it works: After downloading their app for Android (GOOG) or the iPhone (AAPL), the user registers with their credit card and other info. When a ride is needed, simply tap a request through the app. Uber drivers can see where you are based on the phone’s GPS (or where the pick up point is set), and the first car to accept the request high-tails it over to you, where you hop in and go about your business as your less hip buddies are left on the curb still whistling their brains out.

When you arrive at your destination, no need to worry about any payments or figuring out the tip, it’s all calculated for you and charged to the card you have on file. The app sends a receipt via email, as well as a request to rate the driver. Those with low ratings do not last very long, but careful not to pull your usual crazy cab hi-jinks -- drivers also rate the passengers.

And the cars they send aren’t the smelly old yellow death-boxes you’re used to hailing. The service, running since 2009, contracts with limousine operators and licensed drivers who have their own private automobiles, usually a town car or an SUV. Unlike a private car service, however, the driver doesn’t know where you’re going before picking you up, and must take you wherever you want inside the covered area.

The service is just like a taxi, but way better. Except for the price, that’ll run you more.

Sometimes, depending on the time, a lot more -- often an extra 50% of typical cab fare. Operating under yield management principles, the fair can skyrocket during peak periods based on the time of day or year, varying on the available mix of drivers versus the amount of riders needing a lift. Last New Year’s Eve, for instance, riders claimed extortion when they were charged fares of $100 for routes that typically would have been around $25, according to The Economist.

But overall, customers seem to be fine with paying a bit more for the extra perks. With operations in 13 cities, an aggregated fleet containing thousands of towncars, and a 20-30% monthly growth, Uber has tapped into a bursting market that was deeply unsatisfied with the typical cab experience.

But the field is not an empty one. They face competition from companies like GroundLink, which allows advanced reservations (Uber does not), and from Taxi Magic, which also allows you to easily summon a car from a phone app. It still sends the same old taxi cabs, however, but retains the lower cab rates, so maybe people won’t mind as much.

But no matter which company comes out as the car-service industry leader, be it Uber or something else, at least we’ve seen the day where we finally have the technology that rivals waving your hand around in the air and whistling.
POSITION:  No positions in stocks mentioned.