Starbucks T-Mobile Hot Spots Not so Hot

Brad Isaac · #1 03-26-2004, 09:04 PM

We've debated the issue of restaurants and coffee shops offering paid for WiFi and how it may or may not bring in business. Around the middle of the month we told you about McDonalds new WiFi strategy and how it seemed a bit dead before it even got started. Now, we hear that some of the pioneers of the paid for WiFi (Starbucks and T-Mobile) are not doing so well either.
Ars Tecnica has a blurb about how T-Mobile is only making about $13 per Hotspot per day!

"That is likely way less than T-Mobile is forking out for the T-1s running into each store on top of other operational expenditures. That is the primary (and possibly fatal) weakness of the for-pay 802.11b/g business model. With the number of free sites on the rise, paying US$6.00 per hour or US$29.95 per month to surf while drinking your four-dollar cup of coffee is not an attractive value proposition, even when two such strong brands are throwing their weight behind the concept. If you really need to sate your caffeine and Internet jones, you are better off finding a place with free WiFi, or at the very least, showing up at Starbucks with a tripod and Pringles can."
Personally, I am surprised by this finding. I thought if anyone would be better suited for paid WiFi it would be a large coffee house chain. After all, it would be great to sit back with a large cup of joe and surf the morning away on your Pocket PC....Wait! I can do that from home!

Any comments?

jkendrick · #2 03-26-2004, 09:23 PM

I work out of a mobile office in the trunk of my car most every day. I go from one office to another all day long and I carry my PPC and my laptop everywhere. It is crucial I be able to get my email off and on throughout the day to stay in touch with my clients so to insure I can do so I have the Verizon Express Network via a cellular modem in my laptop. I pay $80/ month for this privilege which while expensive insures I can get my email anywhere I happen to be.
The Express Network is fast for a cellular network but let's face it you wouldn't want to depend solely on it for your internet connection. This is why I pay T-Mobile $30/ month for unlimited WiFi. Often the only time I have to check my email is between meetings in different offices. There is always a Starbucks on the way and the WiFi service is very good. So that's why I am willing to pay it. It's a legitimate business expense for me.
Would I pay it just for personal use? No. I am surprised by the low numbers you quote though. I see at least one or two people using WiFi every time I am in a Starbucks which occurs at all times during the day. I would think they would be making more than that.

bkbroil · #3 03-26-2004, 10:26 PM

I've used the Starbucks ONCE...and that was because we lost power in my neighborhood. I stayed at Starbucks the whole day using the wi-fi connection and I only saw one other person with a computer come in...
I think it is very convenient to know I can always get a connection if the power goes out or something....but if the connection was free.....then I would probably make trips over there once or twice a week, just for a change of scenery and good coffee..

knelson · #4 03-26-2004, 11:06 PM

I have used it at Starbucks but when I compared the price I might as well use my sprint card. I only do mail so speed is not as big of a factor as if I was browsing.... I do go wifi when I am hanging out for awhile, like if I drove my daughter to set and have hours to kill...
Along the same lines - one of our customers is the Historical Mission Inn in Riverside... www.missioninn.com (beautiful historical hotel) and they are going to offer WiFi as a value added vs profit center. They have a coffee company on the grounds and restruants and feel they need to have it there to be in the market.

bkbroil · #5 03-26-2004, 11:15 PM

That IS a beautiful hotel....Nice, very nice.

Brad Isaac · #6 03-26-2004, 11:41 PM

Yes...that is a gorgeous hotel. It's the kind of place I wouldn't use WiFi in though. I'd be in the pool or just lounging in the lobby 8-)

bkbroil · #7 03-26-2004, 11:53 PM

Quote:

It's the kind of place I wouldn't use WiFi in though.

But think of it this way....My wife and I just booked a hotel in Panama City Florida for a family vacation and we looked for places that had wifi, so that I could still bill a couple of hours a day while on vacation...(nothing major, just like two hours at night or early in the morning)....so it's kind of like getting a discount on my vacation just for having a broadband connection.

Plus.....I couldn't go a whole week without posting to PPCA, I haven't been able to post for the past two days and I'm going through withdrawl symptoms! (Now that a REAL Pocket PC ADDICT!

)

knelson · #8 03-27-2004, 02:18 PM

We are installing Wifi around the pool area, the new spa (the are hoping to be maie and female european all day spa, around the coffee company (starbucks type), and then the business center, the suites, the conference rooms and meeting rooms. The hotel does lots and lots of meetings ... rotary clubs, microsoft regional meetings .
If you come to California let me know and I will get you some comps.