Tuesday, June 22, 2010

Five Reasons to Worry About Free WiFi at Starbucks

Five Reasons to Worry About Free WiFi at Starbucks By: Joe Maglitta
It sounds like a smart technology idea. Still …

Like most, I appreciate free stuff, mobile computing and creative use of IT to drive business. And coffee. I'm not ashamed to express my love of Starbucks. I cannot imagine—and fear—a world without the green Goddess of Go. Still, I'm concerned about the chain's recent announcement of free, all-you-can-gulp WiFi in 6,700 company-owned U.S. shops starting July 1. I'm worried for myself as a coffee drinker, for Starbucks as a business and, in my darkest moments, for our nation. Here's why:

1. You think it's tough to get a seat now? Like many over-clocked mobile professionals, I often duck into Starbucks for a quick jolt, a little laptopping, maybe a snack. If I'm lucky, I get a seat. If I'm really lucky, that seat is near a power outlet. Unfortunately, my favorite shops are always clotted with students studying and business types typing. All on laptops. I live in a college town and often work in Manhattan, so maybe I'm extra touchy. But it's hard not to notice: The biggest barnacles are always online. Added congestion from free WiFi will only make Starbucks less inviting for all except committed homesteaders.

It will only get worse.

2. AT&T nets already groaning. Starbucks named AT&T its sole WiFi provider. Will new WiFi traffic strain the carrier's networks the way iPhones and iPads have? Best case: AT&T reinvests cash from the Starbucks deal to fortify its overmatched cell networks. Worst case: Starbucks becomes a network black hole for reliable WiFi AND cell coverage, sparking an angry backlash.

3. Security and tech support. It will take smart on-site security to avoid enabling fishing-in-a-barrel by password sniffers and stealers. And there better be at least one person in every store who can troubleshoot/reboot a router, or heaven help us all.

4. Revenue and profit pressures. Table squatters may nurse a Tall or a bottled water. By and large, though, they're cheap. In fact, I'll bet that, somewhere in Starbucks corporate, there is a chart showing that the more time customers spend in a store, the less money they spend. It's easy to imagine that's why Starbucks brewed up the idea. “Customers hanging around and not buying scones and lattes? Let's double down, get more of them to hang out more. We can sell more in-store and online …” But while buyer butts might be in Starbucks, their browsers are on the Web. So while there's good reason to buy coffee at the store, why would I buy music from Starbucks just because I'm sitting in one? In-store online deals would have to be really compelling (i.e. cheap). Perhaps instant coupons for discounted in-store CDs. Coupled with the cost of providing free WiFi, such discounting could further strain company and partner profits. Overall, you'd need pretty great reasons to stay and read ads, offers, etc. on a Starbucks/Yahoo page. Planned free access to the Wall Street Journal and Zagat is a good start.

5. Potential loss of U.S. leadership, innovation, productivity and American greatness. Rival Dunkin Donuts' ads proclaim thatAmerica Runs on Dunkin.” Sorry DD, that's only partially true. Based on my observations, America's leaders overwhelmingly get their caffeine at Starbucks. Can you imagine the economic impact if enough Alphas decided they'd had it with Starbucks for reasons above and switched to, say, green tea, or worse, quit caffeine altogether? Devastating. Maybe that's java jitters talking. But it could happen. Now that I think of it, expanding Starbucks shops might be an excellent use of any TARP money still hanging around …

Fourth Places: Caffeinated Libraries, Starbucks U.

I hope I am wrong about all this. Like I said, I love Starbucks. It is one of America's, if not the world's, great companies. The people who run it are certainly smarter and richer than me. That includes Stephen Gillett, CIO, EVP and GM of Digital Ventures at Starbucks. Free, customized in-store surfing/shopping might well be a brilliant new strategy. The Starbucks Digital Network could provide a much-needed new model for narrowcast publishing. Maybe more stores will do what I've seen in midtown Manhattan—create a library-like alcove for the long-term laptop lingerers. And I'm certainly not against a social “third place” for students and job seekers; I've been there.

I'd also like for Starbucks, in addition to turning their stores into libraries, to cut more deals for coffee shops and free wireless in public libraries. Doing so would bring much-needed revenue, patrons and caffeine. Nobody cares if people linger at the library—you're supposed to. My wife, ever a visionary optimist, has another idea: Why couldn't Starbucks expand and officially become a location for solopreneurs like her? (And she doesn't even drink coffee.) Offer social groups, live and online courses, like Small Business Administration, with better beverages, company and music. Starbucks U.?

Fact is, I have a wireless broadband card, so I can go anywhere I want. I just prefer to go to Starbucks. I'll bet I spend a good $1,000+ a year there on coffee and food alone. But if I can never get a seat, I'll go elsewhere. Smart, “no-brainer” tech ideas like free WiFi can sometimes cause unexpected headaches. Starbucks should be careful that all-you-can-sip WiFi isn't a last cup for people like me.

No comments: