Taxi apps battle for global market | Science| In-depth reporting on science and technology | DW | 12.03.2013
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Science

Taxi apps battle for global market

The number of smartphone apps that enable passengers to book taxis have exploded in the last two years. The makers of the most successful apps are now planning rapid global expansions.

With around 22,000 licensed taxis weaving their way across London on any given day, and thousands more licensed private hire cars, waving down a cab from the roadside shouldn't be a difficult task.

But there isn't a single Londoner who hasn't at some point had to watch helplessly as a string of taxis pass by full of passengers, or found themselves leaving a pub at eleven o'clock at night without any way of getting home.

Many city dwellers around the world will have had similar experiences.

A number of smartphone app developers have independently considered this problem in the last few years, and spotted a gap in the market - for passengers on the go, who need to find a taxi quickly.

And smartphone owners can now download apps such as Hailo, Get Taxi, Uber or Click-a-taxi to book their ride.

Emerging market

In markets where app booking services are available, only one in twenty journeys is estimated to use the service.

But that proportion is rising quickly as more people buy smartphones, as more taxi apps appear, and as they start to go global.

Passenger getting into a black cab in London (Photo: Robin Powell)

Black cabs carry about 300,000 passengers every day

In London, Hailo is the most successful app exclusively aimed at the drivers and passengers of the capital's iconic black cabs.

"It's an app for drivers that customers will also use as a service," says Russell Hall, one of the three taxi drivers behind Hailo, which launched in November 2011.

Along with three internet entrepreneurs, Hall and fellow cabbies Gary Jackson and Terry Runham designed an app that would give drivers an "extra pair of eyes" in finding their next customer.

The Hailo team worked hard to recruit black cab drivers in London, signing up hundreds of them before the app was offered to the public. So when Londoners started using Hailo, there were already enough drivers using it to make the service viable.

Russell Hall, co-founder of Hailo taxi app

Hailo's Russell Hall says the app is by taxi drivers for taxi drivers

Apps like Hailo use a familiar set of smartphone tools: GPS or cell-tower triangulation to pinpoint a passenger's location, a secure payment system to enter credit card details (although not all of the apps have integrated payment yet), and a map to show the real-time location of your taxi.

A nice touch with Hailo is that once the system has located your nearest available car, it sends you the name of your driver, his vehicle registration and even his phone number - in case the driver and passenger have problems locating each other, for example.

The minimum charge for a ride with Hailo is five pounds (5.70 euros). The drivers using the system - over 9,000 of them - give Hailo ten percent of each fare booked via the app.

Hailo's commission does not seem to have deterred drivers.

"I think it's the best thing to happen to the black cab trade in quite a while," said cabbie Stephen. He says Hailo has substantially improved his business, but admits that some of the more technophobic drivers will probably never embrace it.

Global network

Hailo and another app, Israel-based Get Taxi, are well established in London, and are now looking much further afield. Hailo has launched in seven cities, while Get Taxi operates in fifteen locations around the world, including Moscow and Tel Aviv.

London taxi driver holding a smartphone, showing the Hailo taxi app (Photo: Robin Powell)

Thousands of drivers now use taxi apps to find customers

The makers of these two apps - and others - are eyeing what many see as the holy grail of the taxi market: New York. Reluctant regulators approved taxi booking apps for public use in New York in February, so the rush is now on to meet the demand.

The San Francisco-based app, Uber, has a head start after it ran a pilot scheme in The Big Apple in 2012.

So far, though, Uber has focused on the higher end of the car hire market rather than the everyday consumer.

When it comes to global expansion, however, the prize for ambition goes to Denmark-based Click-a-Taxi. In February, Click-a-Taxi announced that it had stitched together a virtual network of around 2,000 taxi firms, allowing passengers to book a taxi in any one of 40 countries.

"It would be hard to communicate to the user that this was something that was actually going to happen if we stretched it out over three years," CEO Soren Halskov Nissen told DW when asked why his company had chosen to expand so rapidly.

Future plans

Both Nissen and Hailo's Russell Hall say that building up a network of trusted taxi firms takes time. They say it has to be done the old fashioned way: on the phone, and by word of mouth.

Nissen says his team starts by contacting the top hotels in each target city and asking which taxi firm they use.

Once a network is in place, the heart of all of the taxi apps forms around the complex algorithms that are required to track a network of cars and provide the passengers with the quickest pick-up.

Uber's co-founder Trevor Kalanick and Russell Hall of Hailo are both keen to make maximum use of the data that their apps collect to both improve and expand their services.

For example, they may want to predict how many more rides will be needed on rainy days in a city like Seattle than on fine days (when customers might be more inclined to walk).

In London, Hall says he wants to use the data to build up a city "heat-map" of where drivers are most likely to find their next fare.

The spread of taxi apps worldwide begs the question of whether one app - on Android, iOS or Blackberry operating systems - will come to dominate globally.

Some analysts believe there will be a period of healthy competition rather than a monopoly by one app.

But the big guns of the online world will most probably try their hand at the game, too, says Matt Simms, a Cambridge-based app developer.

"I would be surprised if Google didn't try to do something - most likely on their own," says Simms.

Hall says he would be dismayed if the app he first dreamed up in a pub with his mates several years ago were to lose its identity in the global marketplace.

"Whatever the future holds," says Hall, "if Hailo stands there as a brand and as a taxi app primarily, then I will be tremendously proud."

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