Starbucks gives update on wireless rollout

Starbucks Corp.’s rollout of public access wireless LAN hotspots in its coffee shops is paying off, according to a company executive speaking at this week’s CTIA 2003 show in New Orleans.

Wireless LAN, or Wi-Fi, users are staying on average about nine times longer than about 70 percent of typical customers – 45 minutes compared to five minutes or less. Starbucks considers the broadband connectivity, which is a pay service, a “new line of business,” says Ann Saunders, vice president of Starbucks interactive.

How much profit Starbucks expects from this new business was not disclosed.

The coffee shop retailer, with wireless operator T-Mobile USA Inc. and Hewlett-Packard Co. (systems integrator for the project), outlined usage statistics and user profiles at a press conference this week. Currently there are 2,100 Wi-Fi locations at Starbucks coffee shops in the U.S., with additional sites going up in Britain and Germany. Each store has a T-1 connection to the carrier’s net. By year-end, all 2,600 U.S. stores will have wireless access.

In the six months since the rollout began, Saunders says usage is exceeding Starbucks’ expectations. Hotspot user typically arrive during off-peak hours. About 30 percent of the 22 million people who visit Starbucks shops weekly stay on average about 20 minutes. The Wi-Fi users are staying twice as long. Whether that translates into twice as much coffee consumption is unclear.

Starbucks is leveraging the retail wireless infrastructure for internal business use. Some 600 district managers, each of whom might oversee 10 to 12 retail stores, now have Wi-Fi-equipped laptops, which they carry with them during visits. Saunders says a survey found that these managers spend about 10 percent of their workweek online, accessing corporate data and applications.

Users are typically professionals, and typically male. Some are frequent, national travelers, but a surprising number are “local mobile professionals” such as real estate agents, who stop in for coffee or meet with customers at the coffee shop and can access Web information and listings without going back to the office. With a new portable, battery-operated printer from HP, they can even print out contracts.

Eighty-two percent of the users log in with laptops. The rest use PDAs, but this is growing quickly, the executives say. Two-thirds of users are equipped with external Wi-Fi adapter cards plugged into their computers. But the number of devices with Wi-Fi built-in is also growing rapidly.

The project is a showcase for T-Mobile USA, the American mobile division of Germany’s Deutsche Telekom AG. T-Mobile is one of the few carriers or mobile operators that has aggressively embraced wireless LAN technologies as a service offering alongside its cellular voice and data services. At the moment, the company claims to have 50 percent of all public wireless LAN hotspots in the U.S. In April, T-Mobile’s cellular customers will be able to take advantage of a hotspot add-on program, adding the wireless LAN service to their regular monthly T-Mobile bill.

To further spur interest in its hotspot service, T-Mobile this week announced a new pricing option in addition to the $30 monthly flat rate. It will soon launch a “day pass” where for a given fee a user can access any T-Mobile hotspot at any location for 24 hours.