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TECHNOLOGY, DISCOVERY & INNOVATION. UPDATED 7 MINUTES AGO.
You are here: Home / Automotive Tech / Ride-Hail Apps Focus on Experience
Ride-Hail's Next Battleground in the Fight for Passengers: Inside the Car
Ride-Hail's Next Battleground in the Fight for Passengers: Inside the Car
By Johana Bhuiyan Like this on Facebook Tweet this Link thison Linkedin Link this on Google Plus
PUBLISHED:
DECEMBER
06
2016

There is very little loyalty in ride-hail. In many markets, drivers work with multiple platforms and often accept the first request that comes in. Riders, on the other hand, typically choose a service based on price, availability and convenience.

For years, Uber, Lyft and many of their counterparts around the globe have worked hard to scale a passenger "experience." Many (myself included) argued that transporting a culture and aesthetic from market to market was a lofty, if not impossible, goal because the passengers' primary interaction with said culture was with the companies' hundreds of thousands of drivers.

As independent contractors, drivers cannot be "trained" by the company or told how to perform their jobs; otherwise, they could argue they are, in fact, employees of Uber and Lyft.

So now, as valuations soar and the need to deliver returns becomes more pressing, ride-hail companies are competing for passenger loyalty by attempting to enhance the in-car experience using ... well ... technology. While Uber took the software approach, the company's main competitors, Lyft and Ola, have instead decided to make a push into hardware.

Manufacturing hardware, which neither Lyft nor Ola are charging its drivers for, is an often costly and time-consuming endeavor, especially considering that the appeal of app-based companies is not having to worry about covering the costs of things like creating, producing and then shipping a physical product. (Neither company would disclose the cost to produce their devices.)

More importantly, it's also unclear whether it's a worthy push for either company as they continue to fight an expensive war against Uber in the U.S. and India. While figuring out how to scale an experience tangibly is a difficult problem to solve, it seems unlikely that passengers would choose one service over another based on the presence of these devices.

But the bottom line is that these companies are increasingly competing on experience and branding. It's pretty clear Lyft, Uber and Ola are betting that an investment in the resources needed to do it right will work.

Uber, for its part, rolled out a new and improved passenger app that acts as a pseudo-concierge while on a ride. With its integration with its sister-app UberEats, for example, riders will be able to see all the restaurants that can deliver to their destination by the time (or near the time) that they arrive there.

Eventually, it will also work closely with other apps like Yelp (so riders who choose a restaurant as a destination can automatically see reviews and ratings) and Snapchat (to send filtered pictures with rider ETAs). The benefit of simply revamping the app to do what other companies are doing through hardware is 1) it's likely much less expensive for Uber and 2) Uber is accessing its passengers through a device every single one of them already have and use.

In mid-November, Lyft unveiled a bluetooth-enabled device that would effectively replace its pink LED mustache. The device, called amp, glows different colors to signal to passengers which car is theirs and also displays custom messages for each rider.

Lyft has long pitched itself as the "friendly" ride-hail service, hoping that it would be enough to differentiate its service from Uber. This pill-shaped device is a small step toward making the Lyft experience an actual physical experience without forcing drivers to do something, as I argued previously.

While Lyft is building the software in-house, the company has contracted with a third-party to manufacture these devices for its hundreds of thousands of drivers in the U.S. Its functionality, in its current iteration, is meager and does little to actually enhance the passenger's ride experience. But to its credit, it may potentially cut down on the time it takes riders to connect with drivers.

Ola, Uber's competitor in India, has also taken the hardware approach - but it's taken it one step further. As part of a partnership with Qualcomm, Ola began rolling out tablets that are connected to the vehicle's operating system and allows passengers to take control of the in-car experience, like the music, from the back seat of the car. To that end, the company has also partnered with Apple Play and plans to partner with more companies in order to build an entire ecosystem of apps and integrations into the tablet.

The premise is that because of traffic in India, rides are longer, and Ola alone has seen over 60 million minutes in travel time.

"There's a lot of innovation happening in this space but ... with regards to in-car experience, they're all essentially happening at the beginning and end of the ride. [We wanted to see] how can we make the ride itself more interesting," Ola spokesperson Anand Subramanian told Recode during a previous interview.

However, Ola too has now taken on the very expensive burden of working with third-party manufacturers in China to produce these tablets. To add to that, the company also has to install the hardware into each vehicle, which takes about an hour. In other words, this is costing the company significant time and money.

The ultimate success of these devices rests on whether the companies see an increase in both passenger retention and new rider acquisition. Failing that, Lyft and Ola can try to monetize that passenger interaction. Neither company has ruled out allowing advertisements on its devices. In Ola's case, there is also the opportunity to cut deals with partnering companies for every new user of their service or simply for exposure to new users.

© 2017 Re/Code under contract with NewsEdge/Acquire Media. All rights reserved.
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