Starbucks CIO Brewing Up Much More than Free Wi-Fi

CIO Stephen Gillett is no plain old IT order-taker. He's leading a new group developing even more in-store tech offerings--and delivering what CEOs want most from CIOs: strategic innovation.

Yesterday, coffee-purveyor Starbucks reversed course on its long-standing in-store Wi-Fi policy by announcing that starting July 1, Wi-Fi would be free in all its U.S. establishments.

Starbucks Free Wi-Fi
Want some free Wi-Fi with that coffee?

Though CEO Howard Schultz broke the news, CIO Stephen Gillett stands at the center of Starbucks' new and expanded Wi-Fi strategy. Gillett's other title is general manager of Digital Ventures, a relatively new group driving Starbucks' evolving in-store tech offerings.

The thrust of the announcement was more than just gratis wireless connectivity. The Starbucks Digital Network (rolling out in fall 2010) includes partnerships with such companies as Yahoo, Apple and the WSJ.com that will give customers access to free online content, local news, music and videos while in store, Gillett wrote on his blog.

All of this is part of the retooled "Starbucks experience" that Gillett discussed when CIO.com spoke with him just six months into his new gig in late 2008. (See Starbucks' Next-Generation CIO: Young, Fast and In Control.) "When you look at our customers and what's happening in our stores," Gillett said at the time, "you see wireless devices, iPhones, converged networks, laptops. You see a generation of customers who are entering our stores and engaging [with us] in new ways."

Like a potent cup of Joe, it's energizing to see a CIO at the center of a critical corporate plan: Leading strategic initiatives rather than playing the role of a back-office IT barista.

Both Schultz and Gillett mentioned several times yesterday that Starbucks envisions its stores as "the third place"—a wired coffeehouse that bridges the home and the office. The free Wi-Fi is just one way to attract more customers who previously might have been turned off by the somewhat complicated AT&T-based registration process and networking policies.

Gillett and his Digital Ventures team are probably hoping that the "one click" log-in that Starbucks is touting with the free Wi-Fi will pacify customers: According to a 2009 survey of 2,700 Wi-Fi users, 50 percent of users were irritated by "complicated login screens," and 35 percent reported "complex payment procedures."

According to Gillett, "You get to a 'click to accept' standard notice, then you are in."

What Took Starbucks So Long?

In response to the Starbucks announcement, some bloggers (and commenters on the related posts) collectively asked: "What took you so long?"

On the popular Techdirt.com site, founder and contrarian-in-chief Mike Masnick wrote:

Way back in 2003, we explained why fee-based WiFi almost certainly did not make sense for coffee shops like Starbucks. A year later, we had a discussion on how the program could be a lot more successful if it went free. But, for years, Starbucks insisted that the paid WiFi was a success. Except, if you watched, it gradually got more and more "like free." And that's because few people were actually using the paid version.

Customers have come to expect free wireless connectivity: According to that 2009 survey of 2,700 Wi-Fi users, nearly 80 percent said that Wi-Fi should be free.

But for many retailers and businesses over the years, the decision to offer free Wi-Fi wasn't so easy—especially if they were generating revenue on their hot spots.

1 2 Page 1
Page 1 of 2
7 secrets of successful remote IT teams