TOKYO -- Sony will lead a new Japanese effort to develop a taxi-hailing system that uses artificial intelligence to predict demand, entering a field of competition that includes the likes of Toyota Motor and Uber investor SoftBank Group.

Five taxi operators will form a joint venture with Sony to build the platform. The aim is to dispatch taxis more efficiently by analyzing such factors as past rides, traffic and weather conditions, and event schedules.

Sony, which uses AI in such products as the Aibo robot dog, has been looking to raise its profile in both consumer and business applications of the technology -- an effort that has seen it make investments in the U.S. and joint ventures in Japan.

In the taxi industry, it also appears to see an opportunity to provide digital payment services, which would create a steady stream of fee income over the long term. Sony's alliance includes Tokyo-based operators Daiwa Motor Transportation, Hinomaru Kotsu, Kokusai Motorcars, Green Cab and the Checker Cab group.

Sony is not the only one vying to seize the initiative in Japan's nascent market for cab-hailing platforms. App developer JapanTaxi announced a partnership with Toyota on Feb. 8 that will see the automaker invest 7.5 billion yen ($70 million) in the unit of Nihon Kotsu, one of the country's largest taxi operators. In terms of fleet size -- a major factor in convenience for users -- this alliance leads with roughly 60,000 taxis. It, too, is working on an AI-powered dispatch system.

U.S.-based Uber Technologies is in talks to offer dispatch systems to taxi providers including Japan's Daiichi Koutsu Sangyo. Daiichi Koutsu has already announced plans to team with Didi Chuxing, China's largest ride-hailing company. Both Uber and Didi are backed by SoftBank.

Japan's sprawling taxi industry is finding that it takes more to compete nowadays than lace-covered headrests.   © Reuters

These efforts center on taxis because of Japan's in-principle ban on the use of privately owned vehicles in ride-hailing services. This keeps Uber from offering its trademark service in the country, aside from certain sparsely populated areas. Didi plans to stick to taxi-hailing in Japan for now as well.

Apps have become central to efforts by the taxi industry to improve service, with a number of major providers in Tokyo starting to experiment with such services. Several companies joined hands with the transport ministry in August to test a system that allows passengers to check how much a ride will cost in advance. Efforts are underway to enable online payment for distance-based fares.

Nihon Kotsu and Daiwa Motor launched apps last month letting passengers heading in the same direction share a single cab. They also plan to introduce dynamic pricing -- in which fares fluctuate based on supply and demand -- in fiscal 2018.

Taxi companies may eventually end up congregating on the dispatching platform that garners the most users. This would concentrate more data into a single service, likely making it even more attractive to taxi providers and riders alike.