Taxis were fine in Arizona, but we only had 'Electronic Dispatch v1.0' [1]. The upstarts upgraded the dispatching system to v1.1. The main advantage of their upgraded system (over v1.0) was providing instantaneous feedback of the to the passenger's mobile computer. v1.1 also gave the passenger the ability to 'rate' their driver, which was also not a feature of v1.0.

[1] http://www.taxiwars.org/electronic-taxi-dispatch-v1.0/

Uber isn't competing with taxis. They're competing with anyone who can launch a ride sharing app.

uber beats them on price. that's not product differentiation.