Feeds

Hotspots – cold turkey or Big Mac?

Why not try selling more food?

  • alert
  • submit to reddit

Gartner critical capabilities for enterprise endpoint backup

How do hotspot locations make money out of wireless connectivity - simple, by not selling it.

The problem is that many businesses are jumping on the Wi-Fi bandwagon thinking they are heading for the goldmine, writes Rob Bamforth of Bloor Research

Many will fall off en route, many will get there and not find nuggets. We've been here before. The Internet boom and .com bust should have taught us one thing. Despite all the new ideas, opportunities and routes to market, the one vital piece of the plan is a financially solid business model.

Simple calculations on the back of an envelope will do for a start.

Let's do a Wi-Fi hotspot. Base costs are low, say £75 per month for broadband for half a dozen users and amortising the hardware costs over 3 years. If you revenue share with a provider managing the service for you, you may get 50 per cent of the £5 per hour they bill the user. So that's 30 user hours per month to breakeven. Or with access prices dropping to sensible levels that's more like 30 user days per month. A user per day.

Should be easy you think. But do you really want people camped with their laptops, occupying your expensive real estate for a few extra pounds? Depends on your business model. If it's geared to rapid throughput and making a margin from what you sell up to each person moving through, you'd rather they cleared off to let the next person in.

So it's surprising that McDonalds should want to set up hotspots in 75 'restaurants' in and around the San Francisco Bay Area. Even more surprising, they plan to bill by the two-hour period. They hope it will drive traffic during off-hours, but wouldn't it be better if they just sold more food?

When your business model is measured in fast bites not bytes, perhaps your wireless hotspot access should be given free with the food, or based on some kind of loyalty model. Better to give customers a reason to return than a reason to loiter. Of course the problem for most Wi-Fi users is they'll need to loiter long enough for their laptops to boot, connect and shutdown. Casual use hotspots really need an 'instant on, info graze and off' usage model for data access and I don't think we're there yet.

However the much-predicted crash of the hotspot market by many negative analysts is as over eager as the positive hype by the bandwagon jumpers. In any gold rush, the only sure way to make a fortune is to sell shovels. Or at least recognise that gold miners are a new target audience for your existing business.

Many would-be hotspot locations should recognise technology for what it is. An amplifier for existing business models. Just remember that too much volume causes distortion.

© IT-Analysis.com

Related stories

Ronald McDonald to save Wi-Fi
Public Wi-Fi has look and feel of a dead duck
Will the WiFi Bubble hypesters kill WiFi?
Radio Intel - future or fantasy?
Bluetooth to outship Wi-Fi five to one - report
Singapore abandons Wi-Fi for 3G

Build a business case: developing custom apps

Whitepapers

Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Endpoint data privacy in the cloud is easier than you think
Innovations in encryption and storage resolve issues of data privacy and key requirements for companies to look for in a solution.
Scale data protection with your virtual environment
To scale at the rate of virtualization growth, data protection solutions need to adopt new capabilities and simplify current features.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?