A pair of technology companies are shaking up the traditional business model in the Washington region’s taxi and limousine market by allowing customers to summon cars using computers and hand-held devices.
San Francisco-based Uber and Alexandria-based Taxi Magic are trying to upend the tradition of hailing a cab and replace it with software that allows customers to call for a ride with a few clicks on a handheld device.
Uber, whose investors include Amazon.com founder Jeff Bezos and Wall Street heavyweight Goldman Sachs, officially launches its software application in Washington on Thursday.
Subscribers to Uber, available in seven cities from San Francisco to Paris, use its free application to punch in their pickup location and then track the car service’s progress as they wait for it to arrive. The company says cars will usually show up within 10 minutes.
Uber customers put a credit card on file when they sign up, so payment is automatically charged to their account. The company has contracted with existing Washington car-service fleets and individuals to put more than 60 black sedans on the street as of Thursday.
“What we are doing is disrupting the urban transportation space,” said Uber co-founder Travis Kalanick, 35, who sold his first startup, networking site Red Swoosh for $23 million several years ago.
Kristina J. Bouweiri, president of Reston Limousine, one of the largest car-service companies in the region, called Uber “half taxi, half limo.”
“Is there a market for it? Yes. Will it hurt my business? I don’t think so,” she said.
Lee Barnes, president and chief executive of Barwood Taxi, which has 500 taxis in Montgomery County, said Uber could face reliability problems because it “remotely cannot assure the same service quality as local” fleets.
Uber has reduced its pickup time in some cities to less than five minutes and has teams in every city to manage quality, said Rachel Holt, its D.C. general manager.
Kalanick said Uber, which charges a $15 minimum, will be about 50 percent more expensive than traditional Washington taxis. Uber has a $7 base fare and charges 75 cents per minute below 11 mph and $3.25 per mile above 11 mph. Tip is included, and no extra charges are added.
The price is worth it, Kalanick said, because Uber will provide a higher-quality, more-dependable service without added charges for baggage or extra passengers.
“They’ve shown an ability to attract a customer who is willing to pay an expensive premium for a higher-end service,” said Taxi Magic spokesman Matt Carrington.
Taxi Magic, founded in 2007, is also trying to bring new technology to taxi fleets. The company is integrated into a computer-dispatch system covering 20,000 taxis in 45 cities, including the D.C. area.
Jay McClary, vice president of marketing for Taxi Magic, says his company is booking more than 1,000 rides a day in the Washington area.
“We are for improving taxi experiences for everybody,” he said.