Starbucks: more wireless coffee

Starbucks is continuing to expand its in-store Wi-Fi net connection services.

Following the US trend of wireless connectivity, Starbucks (SBUX) is offering Wi-Fi Internet access for a fee at more than 2,300 stores nationwide. With competitors willing to offer the service for free, Starbucks is relying on its ubiquitous presence to make the venture profitable.

Starbucks is continuing to roll out its for-pay Wi-Fi (wireless fidelity)Internet access service. The latest locations to get the service are 24 stores in Minneapolis, which join the 2,300 Starbucks stores nationwide that already offer hotspots. Customers with laptops equipped with Wi-Fi circuit cards can access the Internet for $6 an hour or $29 a month.

This move follows a national trend towards wireless Internet connectivity in public places such as airports, restaurants, and hotels. The growing population of homeworkers has further amplified the need for such a service.

Foodservice operators that can combine foodservice characteristics with office capabilities appear to be well placed to cater to this segment.

EasyGroup is making strides in this department. After field-testing inLondon and Manhattan, it will roll out 15 "Internet cafes in a box", cyber cafe concepts that fit in about 200 square feet, across the US.

Starbucks is hoping to attract this same segment of mobile business people to its Wi-Fi service. It contends that such people will pay for a convenient Wi-Fi service available across the country at coffee shops. Such consumers also value the ambience at Starbucks' locations as it allows them to escape the office while reducing feelings of isolation - a common complaint among homeworkers. Starbucks is counting on the service's wide availability as a key selling point.

With competitors such as Dunn Bros. Coffee Franchising offering the same service for free it is difficult to gauge the potential profitability of Wi-Fi as a for-pay service. The nationwide access that Starbucks can guarantee will certainly help to boost the for-pay service's chances.

However, as people increasingly find they can get the same service at the coffee shop around the corner for free, Wi-Fi may be more likely to end up as a marketing lead, offered for free to attract customers away from other alternatives.

Recommended research - Reuters Business Insight: The Wireless Outlook: Dealing with decline (RBTC0061)

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