Venti Internet Strategy at Starbucks
A Venti Internet Strategy at Starbucks that makes sense. Always has since it started rolling out WiFi in major cities like SF and NY. I was one of the first subscribers to MobileStar using the WiFi networks in Starbucks locations across the city -- from the Fillmore Street one in Pacific Heights to the one next to Safeway on Market Street -- before Starbucks employees even knew they had it.
Although Schultz was responsible for Starbucks' disastrous foray into dotcoms, he's back now as Chief Global Strategist announcing a new initiative to wire 2000 cafes by year end (in collaboration with HP/Compaq and T-Mobile that acquired MobileStar).
What does Starbucks get? Well, street cred, for one -- it's kind of cool, if you're a Net-obsessed coffee seller, to think that your green-and-white emblem could be the de facto dominant entry in the vocabulary of "warchalking" -- markings left by wireless-access fans for their fellows to indicate the location of "hot spots," a la the pictorial language of hobos.
And this is one strategy centered on selling coffee -- a pretty important part of Starbucks's business that analysts worried the company had somehow forgotten about two years ago. The company thinks offering wireless access could bring in revenue by attracting more paying customers outside of the morning hours in which Starbucks does the bulk of its business. Even Mr. Schultz is saying the right things, noting that "this service is a natural extension of the Starbucks coffeehouse experience, which has always been about making connections with the people and information that are important to us over a cup of coffee."
However, the one problem MobileStar had was that it was having to install very expensive T-1 lines in each cafe rather than the chaper and more easily had DSL connections that smaller WISPs like Surf and Sip use. Rafe Needleman this morning was concerned about such WISP's future in Bye-Bye Wi-Fi Small Fry but I'm not sure that's the case. Of course, there will probably be some significant consolidation, a fact that is probably not lost on Surf and Sip's Rick Ehrlinspiel.