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May 04, 2007

Google should buy Starbucks?!

Sheldon Liber is once again at it saying that Google should buy Starbucks. Yes, he means the Coffee Retailer!

So this is why I still think Google should buy Starbucks (NASDAQ: SBUX). It would allow them to convert some of their equity from soft assets to hard assets. See: Going to hell in a hand basket: Hard vs. Soft Assets.

Still True

  • Google is capitalized at five times the size of Starbucks. It would be pricey right now, but is there anything much more pricey than Google stock? This would strengthen long-term cashflow and give them an inroads to many foreign markets.
  • The two could cross-promote each other. After all, Starbucks is venturing into music distribution, movie promotion, broader food selection, kitchen accessories, etc. And both Google and Starbucks have vested interests in WiFI. What if Google handled all of the Starbucks WiFi?
  • Google is trying to corner the market on advertising and Starbucks would be another great platform.
  • What would be the network effect of adding YouTube to Starbucks in some fashion? What if Google became an outlet for Starbucks music and Starbucks became a place to sell things like YouTube DVD's -- maybe the 50 most popular YouTube videos of the year?
  • Starbucks management could also teach Google management about social responsibility. They both claim this atribute, but Starbucks has the better track record and Google's "do no harm" is running into lingering questions with each new initiative.
  • It is also a cultural icon. Just as many people are working on laptops as reading the newspaper during their lingering visits to the stores. Mr Schultz, chairman, has been promoting Starbucks as "the third Place," after home and office to spend time. Seems Google has the same thing in mind but thinks that place is cyberspace.

He does make some very strong points here but I'm not sure I want to see Google entering such a vastly different market. Sure they have some crossovers but Starbucks is still a retail operation, not a technology company.

I think Apple, Inc is far more likely acquisition or partnership target. Google CEO Dr. Eric Schmidt is already on Apple's Board of Directors and I think Google could do some amazing things with the already amazing Mac OS. It would be the final nail in Microsoft's coffin and the OEMs would be groveling for to maintain any piece of the market.

Leave the coffee up to the coffee guys, and focus on the technology.

[Google should buy Starbucks - go ahead and laugh! via Starbucks Gossip]

Posted in Google by usrbingeek at 2007-05-04 14:53 ET (GMT-5) | 0 Comments | Permalink



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