Bloomberg Businessweek - USA (2019-07-22)

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Morethana decadeago,Amazon.com

Inc.startedlettingotherbusinessesrent

itscomputerhorsepowerbythehour

andstoredigitalfilesonAmazon’scom-

putinginfrastructure.Thissidehustleis

nowoneofthemostimportantinnova-

tionsoftheinternetage—anda highly

lucrativeone.AmazonWebServices,

orAWS,maynotbeaswidelyknownas

Amazon’sonlineshoppingmall.Butit

hasbecomeessentialplumbingforthe

technologyindustry,andit’sa keyingre-

dientinAmazon’sappealtoinvestors.

ThatbringsustoUberTechnologiesInc.Amazonbegan

AWSpartlybecauseit neededflexiblecomputerresources

foritsdigitalmallandfiguredothercompanieshadsimilar

needs.Uberhasspenta decadehoningtechnologyforits

ownneeds.CouldthatbetheseedforitsownAWS?

Ubersoftwarequicklymatchespeoplewhowanta ride

withdriversnearby,calculatespricesthatcanmotivate

driverstohittheroad,andplotsefficientroutes.Theseare

tasksmanycompaniesnowbuildforthemselves,whether

it’sAirbnbInc.connectinghomeownerswithpeoplelook-

ingforlodgingorInstacartmatchingcourierswithpeo-

pleaskingthemtodotheweeklygroceryshopping.Uber

couldmakeversionsofitsmapping,routing,matching,and

frauddetectionandpaymentstechnologyavailableforsale

tothosecompaniesandmanyothers.

Thisisn’tpurelya pie-in-the-skyidea.ThuanPham,

Uber’schieftechnologyofficer,saidata techconference

inearlyJulythatthecompanyimaginesonedayoffering

◼ LAST THING

With Bloomberg Opinion

By Shira Ovide

Uber Should Become the

Amazon of Routing

its technology to other businesses, com-

paring this to Uber’s twist on AWS. “We

don’t see why we can’t ultimately offer

that to other people,” he told attendees.

But he also stressed that Uber doesn’t

plan to pursue this idea anytime soon.

Copying AWS isn’t a trivial task, and

it might be unwise. Part of Uber’s advan-

tage is its technology foundation, and it

could undermine the company if it sold

its secret formula to others. Plus, AWS

had the advantage of just about every

business in the world requiring comput-

ing resources, whereas there’s naturally a smaller pool of

customers for supply-demand matching and routing soft-

ware. Still, it’s easy to imagine a half-measure that could be

feasible. Might transit agencies be willing to buy Uber’s map-

ping and dispatch technology?

One area where selling Uber software to other com-

panies could help is in the finance department. Software

tends to generate profits—lots of profits. Amazon Web

Services reports a profit (excluding some items) of about

29¢ for each dollar of revenue. Uber doesn’t have lots of

profits. On the same basis, it had a loss of 30¢ for each dol-

lar of revenue in the last 12 months.

Companies that sell technology to other companies are

also among the most beloved investments for stock buy-

ers. Meanwhile, Uber’s shares have dipped below the stock

price in the company’s May initial public offering, and as of

mid-July are lower still than Uber’s private stock sales in late

2015. 
      �Ovide is a tech columnist for Bloomberg Opinion