Wired Starbucks Gets Lukewarm Reaction

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January 05, 2001 (6:03 PM EST)

By Jill Morneau,

NEW YORK -- For Starbucks customer Jane Elizabeth, the specialty coffee retailer's plans to offer in-store wireless Internet service is about as impressive as a cold cappuccino.

Elizabeth, a manager with a New York City dot-com company, is probably more technology savvy than most. She thinks Starbucks' decision to offer wireless Internet access won't have a profound effect on Starbucks environments because the technology is already proliferating in the everyday world.

"In a couple of years everyone will have a wireless device," said Elizabeth, as she ordered her favorite hot beverage inside a Manhattan franchise.

Her views may or may not reflect the majority of coffee drinkers, but they are shared by some industry analysts.

Wireless Internet access will attract only those who can afford the wireless-enabled devices, said Joseph Laszlo, analyst with Jupiter Research, a Jupiter Media Metrix Company, New York.

Not everyone that walks into the store has a wireless enabled Internet device, Laszlo said. "Few consumers have laptops... [and] laptops are the best device for taking advantage of this opportunity. Handheld devices are much too small," he said.

The service, offered through a partnership with Microsoft Corp. (stock: MSFT), and MobileStar Network Corp., Richardson, Texas, will be deployed, starting in the spring, in Starbucks Coffee Co. locations throughout North America over the next one to two years, said Cheri Libby, public relations manager for Starbucks (stock: SBUX).

Internet cafes with actual PC stations have caught on in many countries outside the United States. Starbucks wireless access, however, will be different.

Instead of having terminals to access the Internet, users will need to provide their own enabled laptop, smart phone, Pocket personal computer, or wireless handheld device.

Laszlo praised Starbucks' decision. "This way Starbucks won't have to take on any administrative costs maintaining the computers," he said.

Even so, Laszlo thinks Starbucks, Seattle, Wash., will need to limit how long users can surf the Web.

"High speed access will incur costs and other resources such as taking up a table. I think they might need to institute a one- to two-hour limit," he said.

MobileStar expects most of the users will be business-oriented, said Pamela Roberts, vice president of marketing with MobileStar. The broadband/wireless company caters to the "professional who has a laptop and is wirelessly enabled."

MobileStar is hopeful that users needing broadband wireless applications will head to Starbucks and enjoy a latte while downloading the latest PowerPoint presentation, instead of having to search for a phone line to plug in his or her laptop, Roberts said.

The decision to add the Internet service came because customers were asking for it, said Libby. Many customers are already bringing their computers to Starbucks stores that didn't have Internet access, she added.

Currently, most Internet use is done from home or at work in the United States, according to Jupiter Research. But, nearly 15 percent go online in other locations.

Judith Hurwitz, president of the Hurwitz Group, Framingham, Mass., an Internet consulting firm, considers the service "cute."

"I don't think there is anything wrong with it. It's not startling, and of course not necessary. It adds another service to Starbucks, becomes gimicky."

People will definitely appreciate it, she said. But it doesn't necessarily translate to people buying more coffee. "I don't see it transforming their business."