Starbucks' role in standards battle
Daniel Schreiber, of Powermat and the Power Matters Alliance, said in an interview with The Verge "Standards are ultimately set in a coffee shop, not in a conference room." He claims that the standards battle between HomeRF and Wi-Fi was decided by Starbucks’ announcing support for Wi-Fi in 2001.
Yes, Starbucks started to roll out Wi-Fi in 2001. But was that the deciding factor in the standards battle? Did Starbucks influence the outcome? History proves the answer is decidedly no: HomeRF was already doomed when Starbucks announced is support for Wi-Fi.
Let’s see what really happened with HomeRF.
HomeRF’s support network was already rapidly declining for two years before Starbuck's announcement. Companies (e.g. several founders such as Philips, Microsoft, HP and IBM) massively started switching to Wi-Fi in 1999-2000 because HomeRF could not keep up in the speed race. Wi-Fi (formally called 802.11b) offered a much higher Internet data rate and was innovating faster. (The history is analyzed in detail in this academic study.)
Wi-Fi’s adoption began in workplace settings before 2000. Wi-Fi's higher data rate and security were superior for office PCs. In 2000, penetration into home networks took off. By the time Starbucks announced their intention to put Wi-Fi in their stores in 2001, many Starbucks’ customers were already carrying Wi-Fi enabled PCs. In other words: Starbucks followed the choice of their customers when they deciding to install Wi-Fi. Home-RF was no longer a realistic option. Starbucks customers were simply not using HomeRF in their PCs.
Here is an EE times article from March 2001, that explains Intel’s (the founder of HomeRF) reason for switching to Wi-Fi in its products: “a surprisingly fast penetration of 802.11b nets into the home.”
So, the outcome of standards battles, such as between Wi-Fi and HomeRF, is determined by consumers buying product for use in their home, cars, and offices. Standards are not set in a coffee shop. Coffee shops and other retailers attract customers by offering services that their customers can use.
The battle between HomeRF and Wi-Fi has lessons for today’s wireless charging industry. But before you draw conclusions, get the facts right!
More than 20 million people are using Qi-phones and that number grows daily. Qi is integrated in the latest smartphones from Nokia, Google, HTC, LG, and Samsung. Car manufacturers like Toyota and Jeep start to offer integrated Qi chargers in production vehicles.
Qi dominates in the home, in cars, and in office settings. Qi products offer a better user experience than Powermat, and Qi’s ecosystem is innovating faster (higher power levels, easier positioning, etc.).
By the way, there is another interesting lesson from the Wi-Fi history. Starbucks’s initial partner in the roll out of Wi-Fi was MobileStar. MobileStar paid all costs for installing the Wi-Fi infrastructure at Starbucks. Starbucks did not invest anything. That did not work out well for Mobilestar. By October 2001 MobileStar shut down. As this EE-Times article explains:
MobileStar installed wireless LAN equipment in public spaces, including hotels, airports and cafes. […] The company had more than 650 locations in more than 35 states, with its highest-profile success a deal with Starbucks Corp. to place the WLAN gear into the ubiquitous cafes in several major cities.
However, the company's business model had a few flaws, Kim said, most importantly the high cost of capital. Using T1 lines in many of its locations allowed it to deliver high speeds, but also at high costs. Adding on the expense of the WLAN equipment and the installation and maintenance fees, she estimated that MobileStar was spending about $10,000 to establish every location. While that cost came down to about $3,000 most recently, she said the high overhead was just too much. "Their business had a heavy up-front capital expenditure," she said. "In the end, it came down to funding."
With capital costs high, she said that MobileStar was losing money with its rapid expansion plans, especially the Starbucks agreement. While that deal promised the company significant exposure, it required a very ambitious rollout plan. It also drove up their costs, because MobileStar had to pay Starbucks a fee to use their space. It was a deal the coffeehouses couldn't refuse, because it required no investment and offered the potential of additional customers in the shops during the traditional dead time of late morning and midafternoon. But for MobileStar, it just meant more costs. "Their business model was not scalable," she said.
Fascinating. This should be top of mind for any company looking to roll out chargers in thousands of locations across the USA.