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Flywheel just opened up a new front in the taxi wars

The e-hail app company wants to replace 'obsolete' taxi meters with a single smartphone

Flywheel, the e-hail app that's not Uber or Lyft, is stepping up their game in the global war for taxi domination. On Thursday, the Redwood City-based company unveiled its new "TaxiOS" designed to replace the antiquated jumble of meters, navigation devices, and credit card machines currently found in many cabs with a single, cloud-enabled smartphone.

Currently, around 50 taxis in San Francisco are operating with Flywheel's new operating system under a pilot with the city's Municipal Transportation Agency. It also aims to launch in New York City, where it's working on an application to the Taxi and Limousine Commission to become the first virtual meters in that city as well.

"Everything that gets done in a taxi can be done on a single device," Flywheel CEO Rakesh Mathur told The Verge. "This complete system is what taxis need to deliver the quality user experience that everyone in the world now has come to expect."

"They almost always fail."

With Uber and Lyft currently dominating the black car and for-hire vehicle industries, competition is heating up for control over the coveted yellow cab space. With their metered rates and street hail exclusivity, yellow taxis still outperform their Silicon Valley rivals in most cities. But the startups, and Uber especially, are catching up. Uber drivers completed more than 100,000 trips a day in New York City, four times more than the previous year, The Wall Street Journal recently reported. Meanwhile, yellow taxis averaged more than 410,000 trips a day in June, down 11 percent from the previous year.

Flywheel's intention to make a move on the in-taxi technology is significant. Currently, a hodgepodge of companies run the meters, credit card systems, and televisions found inside yellow taxis across the country. In New York, two companies each control about half of the systems in the entire 13,000-plus vehicle fleet: Creative Mobile Technologies, based in Long Island City, Queens; and Verifone Systems, based in San Jose. Each company takes a cut of every credit card payment that's made and earns revenue off advertising shown on taxi television screens — although that may be a thing of the past after the TLC recently approved a pilot to junk the screens. That proposal cleared the way for Flywheel to make its move. The company, which is primarily an e-hail service, currently operates in San Francisco, Los Angeles, Seattle, San Diego, Sacramento, and Portland. New York City, which is the country's largest taxi market, is the logical next step.

Mathur called CMT and Verifone's equipment "obsolete" and more reminiscent of the late 19th century than anything that should be in use today. "It really makes so sense in 2015 to be running equipment," he said. "When you take a taxi it's like you're transported back in time, right? From the technology you encounter in a taxi, it's like the DOS computer reinvented."

Mathur says his operating system is the first to bring the meter, dispatch, payments, and navigation to a single device. The company is currently training drivers in the cities where it operates to work the new system. Previously, Flywheel was only used by riders to hail and pay for taxi rides. Now drivers will also be able to use the service to process payments and navigate the streets.

But traditional taxi companies like CMT and Verifone are not taking the threat posed by upstarts like Flywheel and Uber lying down. A spokesman for CMT said, "As the leading taxi technology provider throughout the country, we often see cheap sub standard products creep into the space — they almost always fail — that's because operators cannot afford to lose the confidence of their passengers in the ever competitive market."

Jason Gross, vice president for strategy and innovation at Verifone, said his company was also developing technology solutions to the current problem with in-taxi equipment. With regards to Flywheel's new OS, Gross said, "It's a fine idea, but incomplete." He said that Flywheel lacks the foreknowledge of taxi regulation and the deep relationships with fleet owners and city officials that Verifone has. "We think its fine if another technology company wants to try to offer solutions," he said. 

DOS-era equipment, or a cloud-enabled smartphone?Both companies recently unveiled their own e-hail and payment apps, Arro by CMT and Way2Ride by Verifone. Arro is currently only operational in New York, but has plans to expand to San Francisco, Boston, Chicago, and Washington, DC. Way2Ride is functional in New York and Philadelphia. Both are marketing themselves as the no-surge-pricing alternative to Uber.

Trouble is, that's also Flywheel's pitch. Everyone in the taxi industry, either in the yellow cab market or in Silicon Valley, is operating in Travis Kalanick's $50 billion shadow. Uber has a huge head start, and while the company certainly marginalizes a wide swath of potential customers with its Machiavellian maneuvers and illegal incursions into cities, it is growing at an exponential pace. Three-fourths of the US population live in counties covered by Uber. It's unclear whether the yellow cab industry's shift toward technology after realizing the threat posed by Uber will be too little, too late.