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AThe market has responded with confusion and skepticism. The primary question for most is Apple Inc.'s (NASDAQ:AAPL) involvement. Already the market driver, some wonder what would tempt Apple to share the take with Starbucks. Schultz may have tipped his hand in this respect by referring to MP3s, a universal music format that iTunes does not provide.
Microsoft (NASDAQ:MSFT), on the other hand, might have great interest in such a partnership to push their new Zune player, their attempt to horn in on the Apple personal music and portable video empire. After they failed to break the iPod's lock on sales during the past Christmas season, MS might be looking for some strong cross-marketing opportunities.
However, Microsoft has baggage as well. They don't sell MP3 format music either. Also, the children of Zune, like the iPod people, are encumbered by strong Digital Rights Management limitations and convoluted pricing, which might put off customers.
If Starbucks goes to a third vendor, however, such as e-Music, one has to wonder if they would receive quid pro quo on cross-marketing. The money to be made selling songs isn't going to excite investors, and unless the company finds a way to enter into the hardware business (or, as you could say, go insane), the main benefit of such a program could bring is increased customer loyalty and commensurate sales. I expect them to use the MP3s primarily as incentives for upsells, rewards, and new customer recruitment.
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Reader Comments (Page 1 of 1)
1-30-2007 @ 7:47AM
Steve P said...
I don't know if Starbucks is planning to use this to draw customers, but I would certainly think that would be the intent.
If so, then iPods are by far the majority "mp3" players. i.e. an appeal to them would have more potential.
Other than that - and your prior speculations - who can guess.
I would say that if it is expected that people would use their current paid wifi, then I wouldn't bother. I quit going to Starbucks already because there are more and more good places offering FREE wifi. Wehn Starbucks goes free I MIGHT be back.
(And I live in Seattle. Home of Starbucks!)
(And 20 minutes from MS Redmond campus, but I'm a Mac user.)
2-01-2007 @ 12:09PM
Mitch said...
I'm gonna guess that the Zune will get the music here, with wi-fi enabled and Microsoft saying that they want to put music for download in places like McDonalds I could definitely see them using Starbucks as a "loading zone"