Starbucks/Itunes Partnership

Final Project Karen Cotts South University Abstract When it comes to IT Information Planning, it is very import to lay out the details of each area of this business. The IT Information Planning stage is when to decide on the IT Infrastructure which encompasses the technology and equipment required from the front end to the backend of the system. In this case, that will involve beginning with the customer as they enter a Starbucks store, browse the Apple iTunes music store, browse, and purchase and then download music back to the customers’ device. This will include the technology and equipment required from the customer, Starbucks and iTunes to make the transactions all complete. Along with the planning for the successful completion it is necessary to plan for when failures will occur. This includes planning for the points in the process where the failure(s) can occur and what resolution for each failure will be, along with who will be responsible for the resolution. It is important to understand what the long term effects of the failure could mean to the business. One very good way to document this information is with an Information Flow Diagram. This will depict the resources involved in the flow of information throughout the process. Mobile Technology is expanding daily. It seems to be one of the fastest growing kinds of technologies in the news today. With the advancements in Personal Area Networks (PAN) and Wireless Access Protocols (WPA) mobile devices of today can be developed that are more secure than ever. They can be more accessible than ever before and provide faster and more accurate data transfer. The uses for the mobile devices have begun to expand into more and more areas of daily life. The iPhone mobile phone developed by Apple, Inc. s one of the most popular and bestselling mobile phones on the market today. In order for the iPhone to be at the head of the industry several of the most important technological features are required. The protocol for connecting wirelessly to access points must be of the highest quality. The security of the connection between access points must be the best it possibly can be. And finally, the security from the device itself must be effective to safeguard any monetary transactions and data. Information Flow (Part I) ITunes has made it very easy to log on and create an account with them. Creating an account is free. All you need to do is log on to http://www. itunes. com . There is a button you can click on to log-in and another you can click on to register. Click on the button to register. You will need to enter your email address, First and Last Name, Billing Address and Credit Card Information. Your email address will be used if ITunes needs to contact you about your account for any reason. Your Name and Address, along with your Credit Card information will be used to bill for any items you purchase from the ITunes store. Using banking services for micropayments is very expensive. ITunes is able to avoid the high cost because of the volume of business they conduct. They are able to negotiate a transaction fee with the credit card issuers and banks that cost them very little. Figure 1. 1 is the Information Flow Diagram which will show the process for registering with iTunes and then ordering music for downloading. Customer accesses iTunes store online to purchase music. Customer clicks on Registration Button, and then enters Registration Information. iTunes verifies Credit Card information from Bank. Sends Customer confirmation. Bank verifies Credit Card information for iTunes. Customer searches for item(s) to purchase. Click buy, confirm. iTunes sends payment information to customers’ bank. Once confirmation is received the download process is initiated. Bank deducts payment amount from customer account and sends it to iTunes account. Music is downloaded to Customer. iTunes retrieves the correct music from the database. Database of music stored in . mp3 format ISP ISP ISP ISP ISP ISP ISP I = Internet Service Provider Figure 1. 1 Information Flow Diagram Customer accesses iTunes store online to purchase music. Customer clicks on Registration Button, and then enters Registration Information. Tunes verifies Credit Card information from Bank. Sends Customer confirmation. Bank verifies Credit Card information for iTunes. Customer searches for item(s) to purchase. Click buy, confirm. iTunes sends payment information to customers’ bank. Once confirmation is received the download process is initiated. Bank deducts payment amount from customer account and sends it to iTunes account. Music is downloaded to Customer. iTunes retrieves the correct music from the database. Database of music stored in . mp3 format ISP ISP ISP ISP ISP ISP ISP I = Internet Service Provider Figure 1. 1 Information Flow Diagram After purchasing music for download from ITunes, sometimes the download can be interrupted or will fail for various reasons. These download instructions are directly from the http://support. apple. com/kb/ht1725 website: Restart the download with the following steps. Resuming downloads from a computer 1. Open iTunes. 2. Choose Store > Check for Available Downloads. 3. Enter your account name and password. 4. Click the â€Å"Check Downloads† button. 5. Click the Resume or Resume All button, or the resume arrow to resume the download. You can manually resume the download on your device with the following steps. Resuming downloads from an iOS device 1. From the Home screen, tap the iTunes icon. 2. For iPhone/iPod touch, tap More > Downloads. For iPad, tap Downloads. 3. Enter your account name and password. 4. Click the â€Å"OK† button. 5. Click the Resume, Resume All, or button to start the download. Business Use Case (Part II) Beginning on October 2nd, 2007, Apple and Starbucks began their music partnership. This partnership involved Starbucks supplying the T-Mobile Hotspot Wi-Fi network to its customers as it already had been doing. This network allows customers at participating Starbucks to automatically connect to the iTunes Wi-Fi Music Store where they can browse, search and preview millions of songs available on iTunes. Customers wishing to participate would need to bring their iPod ® touch, iPhoneâ„ ¢, PC or Mac ® with them to Starbucks. The customers have the ability to just sit and listen freely to music. If they find a song or an album they are interested in purchasing they can easily buy and download the items directly to their device. Both the Apple Corporation and Starbucks benefit from this opportunity in more than one way. Because both corporations have excellent reputations, forming a partnership makes good business sense. Starbucks Coffee Company was founded in 1971 and is committed to ethically sourcing and roasting the highest quality Arabica coffee in the world. (Starbucks) The idea of offering the extra perks that iTunes offers in a social setting where people gather with friends is a wonderful concept. Starbucks customers that may not formerly have used iTunes might become customers because of the free access to the trial of iTunes previews and features. This would increase iTunes customer base and sales revenue. This would also increase the number of customers returning to Starbucks for the purpose of iTunes usage. ITunes users that had not previously frequented a Starbucks might start to, for the benefit of iTunes access. And they might bring their friends along. This in turn would increase Starbucks profits. In October, 2007, Starbucks and iTunes offered ‘Song of the Day’, allowing customers to download a handpicked song every day for a month. Six million songs were downloaded. Realizing the huge potential with an audience hungry to discover new music and entertainment content, Starbucks and iTunes worked together to create an ongoing version of the program. In April, 2008 Starbucks announced a new program with iTunes called ‘Pick of the Week’. The program offered coffeehouse customers a complimentary new music and music videos each week. Each Tuesday Starbucks 7,000 US based stores would stock a download card redeemable on the iTunes Store (www. itunes. com). The available music or video of the week was hand-picked by the Starbucks Entertainment team and iTunes. Starbucks) As of August, 2011 new offering from the partnership between Apple and Starbucks allows customers to now get paid apps free at the coffee chain. Physical cards are available with redeemable codes printed on them. This offering is a way for Apple to offer customers who normally only download free apps, a chance to try out some of the paid apps for free. If Apple can impress c ustomers enough with the quality of the paid apps, they have the opportunity of turning some of them into customers who buy apps in the future. (Etherington). The Business Use Case diagram in Figure 2. shows the interaction at Starbucks from the customers’ point of view. The Starbucks and customer interaction is a physical one. Then there is the customer interaction with iTunes. Starbucks Cafe Starbucks Cafe ITunes Music Store ITunes Music Store Search items Search items Enjoys Starbucks refreshments while browsing iTunes Enjoys Starbucks refreshments while browsing iTunes Browse items Browse items Starbucks/iTunes Customers Starbucks/iTunes Customers View recommended items View recommended items Customer authentication Customer authentication Add to shopping cart Add to shopping cart Download to customer Download to customer Payment Processing Payment Processing Add to wish list Add to wish list Figure 2. 1 Business Use Case Diagram- Apple and Starbucks IT Information Planning (Part III) The IT Information Planning stage is a very important one for a business in terms of how successful they will be. The planning that goes into the infrastructure of a company can have a long term effect on the bottom line. If the backbone of the IT structure isn’t built soundly, with adequate flexibility for growth and adaptability, it can affect the way the system can be built upon for years to come. Apple/iTunes Technology Infrastructure The Apple/iTunes music store is a widely popular music and video distribution service. In general, owners of iPods, iPads and computers can download music after purchasing the item from the iTunes store. The music is in an MP3 format. ITunes itself is a browser, but only for the Apple iTunes Music Store. Web browsers such as Microsoft Internet Explorer and Firefox are excluded from access. The only authorized way to transfer media files to the iPod is by use of the iTunes program. ITunes also serves as a media player for audio, video (MP3/MP4 variants) and Internet radio stations. Starbucks Infrastructure Starbucks coffee house is where the customer will come to enjoy refreshments and listen to music either with or without friends. With an iPod, iPhone or a PC, the customer will be able to connect wirelessly to the Apple iTunes store. Starbucks has been using the Wi-Fi network from T-Mobile to service all of its hotspots. This was prior to entering into the partnership with Apple/iTunes. That was not changed when the partnership began. This is an important piece of information which must be included in the Information Flow Diagram. Information Flow Diagram As can be seen from the Information Flow Diagram in Figure 3. 1 different pieces of information are required at various steps in the flow to make a transaction possible. In this simplified example, a customer enters a Starbucks store. Upon entering they connect to the T-Mobile Wi-Fi hotspot that Starbucks currently has a contract with to provide their wireless internet connection. Next the customers device will be populated with a list of the 10 most recently played songs in the cafe. This information is kept updated on a continuous loop by iTunes. Every time a new song is played the recently played playlist is updated. The customer can then request to preview a song from the list. This long is retrieved from the iTunes MP3. db and returned for preview. If the customer chooses to they can then select the song for download. At that point the song is downloaded to the customers’ device and their account is charged a fee for the transaction. There are several points in the process where a failure in the transaction could occur. It is important to plan ahead for the possible fail points to plan for prevention if possible, correction if necessary and damage control. The first point of failure is if there is a problem with the connection between the users device to the T-Mobile hotspot. Unless it is a problem within the users’ device, Starbucks would be the first line of customer assistance to try to troubleshoot the problem. If it is a broader issue and a problem has occurred with the access point it would be up to T-Mobile to correct the cause of the problem. Another possible failure point that would be of key importance is the download to the customers’ device. If the download is interrupted it can be restarted in several ways. If the problem is with one of the physical storage units iTunes would be responsible to have a backup plan to repair/replace the database or other piece of equipment. T-Mobile Wi-Fi Access point T-Mobile Wi-Fi Access point Starbucks Cafe Starbucks Cafe iTunes Music Distribution iTunes Music Distribution Connect to T-Mobile Wi-Fi hotspot Connect to T-Mobile Wi-Fi hotspot Automatically plays songs at Starbucks and updates the playlist of the last 10 songs played. Automatically plays songs at Starbucks and updates the playlist of the last 10 songs played. Retrieves and plays songs in Cafe from MP3. b Retrieves and plays songs in Cafe from MP3. db Request music to preview Request music to preview Retrieves list of last 10 songs played Retrieves list of last 10 songs played Song retrieved from MP3. db and downloaded to customer device Song retrieved from MP3. db and downloaded to customer device Selects song for purchase Selects song for purchase MP3. db MP3. db Figure 3. 1 Information Fl ow Diagram- iTunes and Starbucks Revenue Model (Part IV) Apple/iTunes Revenue ModelThe customer requirements for iTunes are to be able to listen to the last 10 songs played at the Starbucks they are visiting. If the customer finds a song they would like to buy, they want to be able to select purchase by clicking on a button and have the song downloaded to their mobile device. The customer’s account will be billed by the method stored on their account profile for the amount of the purchase. The cost to the customer is $. 99 for a single song. Apple receives $. 29 as profit from this. The competitive advantage for iTunes is that they offer the only music being played at Starbucks. ITunes is also the only music compatible for direct download for iPhone and iPod. The clientele are the customers at each particular Starbucks location. This means the music must be chosen by locality to maximize profits. Starbucks Revenue ModelFor Starbucks in this partnership, the customer requires the usage of the T-Mobile Wi-Fi access. This allows them to have access from the Starbucks location to the iTunes store. This is the wireless protocol access plan used to securely connect the customer’s mobile device to the iTunes store making the possibility of purchasing and downloading music or other content both easy and secure. In a deal with Apple, Starbucks receives eleven percent of the net profits each quarter on the songs downloaded. The competitive advantage for Starbucks is that they have the name and reputation of the Apple/iTunes store behind the music system they are partnered with. This can be a draw for more customers to their coffee shop for the music experience alone. This adds to the current client base increasing the clientele. Benefits All AroundThere are many benefits to be had by both companies in the partnership. Both companies can benefit indirectly. Starbucks has increased coffee and other refreshment sales due to the increase in customers. ITunes has been able to bring in new customers by offering free ‘songs of the week’. This has let customers who may never have started out buying get a taste and decide to buy music. The suppliers to the Starbucks stores also benefit indirectly, as Starbucks does more business they need to order more supplies and that continues on down the supply chain. Location Changes EverythingFor a Starbucks located in the Brewery district in Columbus, OH the choice of music played would be very different than what is played in New York City in Manhattan. Should Apple choose to just play the same song list at all of the Starbucks locations it partners with, there would be a large loss of potential revenue. Song choice by location makes a huge difference for the clientele as to whether they will be interested in purchasing a song or not. Other Potential PartnershipsThe type of partnership that has worked so well with Apple and Starbucks could work equally well with some other types of businesses. I think that any type of business that caters to a rather quiet environment where a soothing music background would add to the enjoyment could benefit from this kind of arrangement. In particular two of the businesses I had in mind are Laundromats and certain types of Restaurants. For the Laundromat business I see no reason that adding music to the mix wouldn’t make for a much more enjoyable experience. I think an extra benefit to iTunes would be that someone doing Laundry might want a little pick me up by way of purchasing a new favorite tune during the rather boring process of doing such a chore. For the Laundromat, one that offered free Wi-Fi and iTunes availability would seem far more attractive than just a mundane, boring Laundromat. It would be a much more pleasant way to spend a few hours. On the restaurant front, it would be nice for a small diner to offer the same type of service. I often see people who are eating alone. When they don’t have someone to converse with, it would make for a nice way to enjoy the meal. They could browse their favorite genre of music and then choose a song to download. This may take a little different song choice selection than the Starbucks selection does. I do think this possibility is something to consider. Revenue Model (Part V) Apple/iTunes Revenue ModelThe customer requirements for iTunes are to be able to listen to the last 10 songs played at the Starbucks they are visiting. If the customer finds a song they would like to buy, they want to be able to select purchase by clicking on a button and have the song downloaded to their mobile device. The customer’s account will be billed by the method stored on their account profile for the amount of the purchase. The cost to the customer is $. 99 for a single song. Apple receives $. 29 as profit from this. The competitive advantage for iTunes is that they offer the only music being played at Starbucks. ITunes is also the only music compatible for direct download for iPhone and iPod. The clientele are the customers at each particular Starbucks location. This means the music must be chosen by locality to maximize profits. Starbucks Revenue ModelFor Starbucks in this partnership, the customer requires the usage of the T-Mobile Wi-Fi access. This allows them to have access from the Starbucks location to the iTunes store. This is the wireless protocol access plan used to securely connect the customer’s mobile device to the iTunes store making the possibility of purchasing and downloading music or other content both easy and secure. In a deal with Apple, Starbucks receives eleven percent of the net profits each quarter on the songs downloaded. The competitive advantage for Starbucks is that they have the name and reputation of the Apple/iTunes store behind the music system they are partnered with. This can be a draw for more customers to their coffee shop for the music experience alone. This adds to the current client base increasing the clientele. Benefits All AroundThere are many benefits to be had by both companies in the partnership. Both companies can benefit indirectly. Starbucks has increased coffee and other refreshment sales due to the increase in customers. ITunes has been able to bring in new customers by offering free ‘songs of the week’. This has let customers who may never have started out buying get a taste and decide to buy music. The suppliers to the Starbucks stores also benefit indirectly, as Starbucks does more business they need to order more supplies and that continues on down the supply chain. Location Changes EverythingFor a Starbucks located in the Brewery district in Columbus, OH the choice of music played would be very different than what is played in New York City in Manhattan. Should Apple choose to just play the same song list at all of the Starbucks locations it partners with, there would be a large loss of potential revenue. Song choice by location makes a huge difference for the clientele as to whether they will be interested in purchasing a song or not. Other Potential PartnershipsThe type of partnership that has worked so well with Apple and Starbucks could work equally well with some other types of businesses. I think that any type of business that caters to a rather quiet environment where a soothing music background would add to the enjoyment could benefit from this kind of arrangement. In particular two of the businesses I had in mind are Laundromats and certain types of Restaurants. For the Laundromat business I see no reason that adding music to the mix wouldn’t make for a much more enjoyable experience. I think an extra benefit to iTunes would be that someone doing Laundry might want a little pick me up by way of purchasing a new favorite tune during the rather boring process of doing such a chore. For the Laundromat, one that offered free Wi-Fi and iTunes availability would seem far more attractive than just a mundane, boring Laundromat. It would be a much more pleasant way to spend a few hours. On the restaurant front, it would be nice for a small diner to offer the same type of service. I often see people who are eating alone. When they don’t have someone to converse with, it would make for a nice way to enjoy the meal. They could browse their favorite genre of music and then choose a song to download. This may take a little different song choice selection than the Starbucks selection does. I do think this possibility is something to consider. | Starbucks Customers Starbucks Customers Starbucks Cafe Starbucks Cafe Starbucks CafeT-Mobile Wi-Fi AccessiTunesArtists supply music to iTunes databases Artists supply music to iTunes databases | Figure 5. 1 Supply Chain Diagram- iTunes and Starbucks Executive Summary Starbucks is the ideal location for the partnership with Apple/iTunes for the music partnership. One of the reasons for this is that Starbucks locations already offered free Wi-Fi access which allowed iPhone users to be able to connect to apple. com and the iTunes Store. The wireless service provided at Starbucks is from T-Mobile. The Hotspots offered are 802. 1x authentication standards and WiFi Protected Access (WPA). This is better than the required basic WEP encryption (Landesman, 2011). The WPA protocol is used to make the connections from customer to access points to the iTunes store and back in reverse for a secure, fast transaction. The security is an important requirement for all parties concerned. This protects the customers monetarily and also their identification information. The security also protects iTunes corporate concerns allowing them to authenticate their customers and accurately process the payments for the transactions. The iPhone is one of the ideal mobile devices to download music at Starbucks locations for several reasons. Beyond the obvious reason that the iPhone was created by Apple and the iTunes Music store also belongs to Apple. As purchased, the iPhone can securely connect to guest Wi-Fi networks. The ease of connection is a great customer benefit. The WPA2 Enterprise with 128-bit AES encryption provides users the highest level of data protection. The iOS installed on the iPhone enables it to securely access corporate services and protect important data. IOS provides strong encryption for data in transmission, proven authentication methods for access to corporate services, and hardware encryption for all data at rest. IOS also provides secure protection through the use of passcode policies that can be delivered and enforced over the air (Apple, 2011). References Apple. (2007, September 5). Apple and Starbucks Announce Music Partnership. Retrieved from http://www. pple. com/pr/library/2007/09/05Apple-and-Starbucks-Announce-Music-Partnership. html Apple. (2011). Deploying iphone and ipad Security Overview. Apple, Inc. Retrieved from http://images. apple. com/iphone/business/docs/iOS_Security. pdf Apple. (2011). Deploying iphone and ipad Wi-Fi. Apple, Inc. 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