Analysts doubt Apple iTunes deal will increase Starbucks' store traffic

Analysts for Starbucks and Apple say their collaboration, which allows Starbucks customers to use free wi-fi to download songs from iTunes, represents the meeting of two spectacularly strong brands but will mean little for short-term sales. "At the end of the day, Starbucks is still about selling coffee in their stores," says analyst John Owens. "I doubt this would significantly change Starbucks' traffic patterns." I suspect store traffic would increase if Starbucks abandoned its 1990s-era model of subscription Internet access. (Seattle Times)
> "I expect that Starbucks will see a real uptick in sales at their initial stores when this features launches," writes tech blogger Glenn Fleishman.
 

Comments

If Starbucks went free Wi-Fi the lobby would be overrun w/ people using it as their own personal office, w/o buying a single thing, "can I get an ice water?"

[Pat Nerr]

Starbucks should try grasping for straws to drive customers in... Customers are always looking for straws

[Jim Romenesko]

There are countless number of coffee shops in the metro Chicago area that have free wi-fi and they don't have the problems you describe. And you want to get rid of the free-water crowd (which I always see at 3 p.m., school closing time)? How about just establishing a NO FREE WATER policy? This Just Say Yes policy is ridiculous; every day I see customers taking newspapers off the pay rack and not paying because, well, Starbucks essentially says that yes they can.

[Kat]

I live in a fairly small city, so the number of places with free wi-fi is fairly limited, but I've never noticed any of them having a problem with people hanging around for hours without buying anything. And some of them provide considerably more comfortable seating than Starbucks.

[Bladerunner]

People need water as much as they need coffee. Other coffee shops that have free wi-fi seem to be doing just fine. A General Strike has been called for September 11th. Patriots Day. Don't work, don't go to school, don't buy anything!
http://www.strike911.org

[Kent]

What's ironic is that Starbucks locations in Malaysia offer free Wi-Fi and have for at least the last three years. I'm not sure any other locations in the world do, but it sure is nice having that option while traveling.

Not sure why they haven't jumped on here at home. What's even more frustrating is the service provider they choose. No one has T-Mobile in my area and EVERYONE has AT&T. Yet, no AT&T Mobile. I don't think I've ever seen one laptop computer in a Starbucks here. And seriously, at less than $30 a month for net access (the wifi routers are already a sunk cost), why would Starbucks not offer it? Seems they would make up the cost in about eight drinks. I'm guessing they'd sell plenty more than that if the college crowd could fuel up and do their homework...

[Lilith]

Jim: good luck with that no water policy. Why not try ordering those little 6oz plastic no logo cups for free water. See what kind of reaction you get.

[Aaron]

I think the deal could result in more sales for apple, but I don't see any benefit to Starbucks. Someone is sitting in Starbucks working offline on whatever, and thinks, "hey I like this song. I think I'll download it." I'm guessing that was a big part of their reasoning. But I don't think Starbucks will see any significant rise in sales. Do they get a cut of every song bought in their stores?

As far as free wi-fi, there are plenty of ways to prevent people mooching, or overstaying their welcome. McDonalds, of all places, even has free wifi at some locations. I've never used it, but my understanding is that you buy something, and it prints the password on the receipt. I see no reason Starbucks couldn't use a similar system. Other coffee shops don't seem to have big problems with it. And most of them are MUCH smaller, and can't afford as sophisticated a system as Starbucks could. Maybe corporate should "just say yes" to the hordes of customers, and baristas, who want free wifi.

[Jim Romenesko]

Caribou gives customers one hour of free wi-fi, which is reasonable. The Alterra coffee chain in metro Milwaukee offers free wi-fi from 6 a.m. to noon. It charges by hour after that.

[Melina]

I think if Starbucks went wireless, they'd have a lot more happy custies. I stopped by for an hour to catch up on some work, sipping a paid beverage, fired up ye olde iBook, and went to connect to teh internets, and, silly me!, Starbucks doesn't HAVE free wi-fi.

Grumble/Groan.

It's archaic for Starbucks not to offer free wi-fi. If their precious lobbies became overrun with too many freeloaders, they could always pull their WAP.

[Lilith]

I wonder when the contract with tmobile ends....

[j-son]

Starbucks contract with tmobile ends in 2009

[wmiller]

Truth be told, the deal means pretty near diddly. It's free wi-fi to download songs ONLY - no general free wi-fi. I really don't think it'll be a significant traffic generator or a financial bump for either company.

Combine that with the fact that it's going to take years to implement across the board (LA and NY are basically test-beds until late this year - if it fails there, they'll kill the idea).

[Lilith]

Not soon enough, J-SON. I pray they do not renew.

[RaspberryThunder]

I was told at a district meeting that when the contract with T-mobile is up, Starbucks plans on switching over to free wireless. Personally, I hope they do. I get tired of trying to explain T-mobile to customers who don't know how to use it.

[Adrian]

Anybody know how much traffic the Starbucks.com website gets in a day?

[Torontodude]

I agree the deal doesn't add up to much.

Probably too many biz dev types at both S'bux and Apple...trying too hard to justify their existence.

My guess? This is a scaled down version of something that started off as a much larger proposal.