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Penny-pinching students like Ulbrick aren't exactly what Starbucks had in mind when it partnered with T-Mobile last year to roll out wireless Internet access in its shops across the country. Now with more than 2,600 Starbucks stores equipped with wi-fi, the duo has created the largest public wi-fi network in the U.S. It is also among the first to test consumers' appetite for paid wireless access outside the home...
...plan was simple: lure droves of tech-savvy customers into the shop with wi-fi, then ply them with grande lattes, oversize Rice Krispies treats and other high-priced snacks. But while the wi-fi hot spots have added modestly to Starbucks' cachet, they have generated less buzz than a cup of decaf. And some Starbucks watchers doubt that they will add much of anything to the company's bottom line. "I don't think it is ever going to be a hugely profitable enterprise for Starbucks," says InStat/MDR analyst Mike Wolf. Pyramid, an analyst firm, predicts that the monthly...
Starbucks shrugs off such dire predictions. "Analysts love the doom and gloom," says Lovina McMurchy, director of Starbucks Interactive. "We believe there is money in wi-fi," she insists. This past summer Starbucks CEO Howard Schultz even pointed to wireless as a factor contributing to the company's $410 million in revenues in June 2003, a 27% increase compared with $323 million in June 2002. Neither Starbucks nor T-Mobile will say how many people are using the service or how much money the venture has actually made...
...ourselves, TIME sent reporters to four stores that the chain identified as being especially popular among wi-fi users. And while we found lots of people using notebook computers, few were online. For example, at the Astor Place store in New York City, there were more than 100 customers one Sunday night, including 15 with laptops--but only three said they were using Starbucks' wi-fi service...
...will wireless ever pay off for Star-bucks? It's hard to say. After all, who would have predicted that we would be queuing up every morning to hand over $3 for a cup of coffee? If Starbucks can manage that trick, perhaps it can make wi-fi profitable too. But one thing is almost certain: relying on cash-strapped students isn't likely to work. Trouble is, the much sought-after mobile professionals who can afford the wi-fi fee also prefer a more private space where they can conduct business and talk on a cell phone in peace...