How Starbucks And WiFi Are Like Movie Theaters And Air Conditioning

from the wifi-frappuccino-please dept

Ever since Starbucks launched its paid WiFi several years ago, plenty of people have questioned the business model for cafes and restaurants charging for internet access. Plenty of other places, both independent retailers and chains, have found free WiFi to be a boon to their businesses, drawing in more customers and getting them to stay longer and buy more stuff. Supposedly some Starbucks managers have even begged the company to let them offer WiFi for free, because they think they're losing customers to other outlets, while an examination of the financial details of the program a couple of years ago didn't make it look like much of a money-spinner for the company or its WiFi provider, T-Mobile. With that in mind, the NYT had an interesting story over the weekend comparing Starbucks to the movie theaters of yesteryear, which saw air-conditioning not as something to drive up prices, but an amenity to offer as a competitive advantage. The story quotes the president of Panera, a chain of sandwich shops and bakeries, who says that the company isn't concerned with making WiFi a profit center, and that it helps fill its locations up during off-peak hours -- a claim it has been making for a while. He then points out, though, that Starbucks are generally pretty busy, so he wonders why they'd make their WiFi free (though perhaps he's using a little bit of the Jedi Mind Trick to ward off competition). Free WiFi would seem to fit with Starbucks' "third space" concept, which is supposed to make its stores a comfortable place between work and home, where people can (and want to) hang out for a while. Free WiFi certainly seems to be helping out plenty of other businesses, but it's hard to argue with Starbucks' success over the years. Still, you'd think that offering free WiFi would help fill the company's stores with more people, particularly during off-peak hours.

Is The Best Way To Ensure Success To Lock In Your Customers?

from the never-knew-dear-abby-gave-advice-to-tech-companies dept

The downslide of Palm is a long-running tale, and the latest development is another round of rumors that the company is up for sale. Nokia has been mentioned as a possible buyer, even though such a deal wouldn't make a lot of sense, with Motorola and a private-equity buyout also mentioned. A story from BreakingViews in the WSJ laments the fall of Palm, saying it happened because the company "failed to build competitive barriers around its devices, so consumers weren't locked into its products." In short, it says the ability for Palm users to easily export their contact data from the devices made it too easy for them to switch to devices made by its rivals. Palm's made plenty of missteps along the way, but this really isn't one of them. Companies that can't compete any other way rely on barriers like this to force customers to stay. The article cites the example of the iPod, but badly misses on the lock-in part, not citing the role music bought from iTunes plays, but rather the bizarre idea that if users got a different brand of music player, they'd have to re-rip all their CDs. It falls further off the track when it cites the Motorola RAZR, saying it offered "insufficiently sticky features" to keep users from switching away. The RAZR didn't sell on features, it sold on design, and playing to fashion means playing to a clearly fickle market. In any case, it also ignores the realities of the handset market, where many users switch devices on a fairly regular basis. Locking in your customers isn't the way to keep them. Perhaps instead, companies should spend their energies on creating the best and most innovative products they can, making customers want to use their products, rather than simply feeling forced to.