Here’s How Google Can Benefit From Its Foray Into Ride Sharing
Reports suggest that Alphabet Inc.’s (NASDAQ:GOOG) subsidiary Google will now allow all its Waze app users in the San Francisco area to find fellow commuters who are headed in the same direction. This is as the company tries to establish itself as a strong player in the transportation segment. The fares for this ride sharing are aimed to be low enough to discourage drivers to operate as taxi drivers. While this is seen as a direct competition to Uber and Lyft, Google’s fares are much lower than the rides of these players and the company is pitching this more as a car pooling facility. We believe this feature can help the company monetize its Waze app, which currently does not have a regular revenue stream. Also, as Google increases focus on driver-less cars and ventures into the transportation segment, ride sharing can be the growth driver for this segment, in our view. As consumers shift away from car ownership, ride sharing could be the default mode of transportation in the future. With its superior technology and experience with Waze, Google can capture a significant market share in this segment.
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Monetizing the Waze App
Google is incorporating the ride sharing service as an additional feature on its Waze app. This app already provides driving directions to its users and incorporates real time community sourced traffic information, thus distinguishing itself from Google Maps. While this app does not have any constant revenue stream, it is being used by 700,000 users in the Bay area alone. With a vast user base and technology in place to assist in driving, a car pooling feature can enable effective monetization of this app. Once an increasing number of commuters use this app for ride sharing, it can collect more traffic (and potentially user data as well), opening up monetization avenues such as advertising and data related revenues.
Future For Driverless Cars
Google is aggressively pursuing its autonomous cars initiatives and hopes to have its driverless cars on the road soon. One of the key benefits of this technology would be ride sharing using autonomous vehicles. The company can gain from its experience with Waze car pool to implement ride sharing in driverless cars in future. Google is not looking to invest in attracting paid drivers for its car-pooling initiative and is promoting commute share among existing travellers. If it launches ride sharing for its autonomous vehicles, it will not need any human drivers and hence the experience with Waze can be easily replicated. Technology will be the key driver of success in these initiatives and Google definitely has a technological edge.
We believe that, while Google has ambitions to foray into the transportation segment, the company’s technology will drive revenues in this segment. Car-pooling via Waze and ride sharing through autonomous cars can enable the company to augment revenues of its search and advertising business. These initiatives can provide a boost to Google’s overall business in the long term.
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