MobileStar’s Mistaken Belief: “If

We Build It, They Will Come”

 Case Summary

MobileStar was a wireless internet service provider

which first gained notoriety in deploying Wi-Fi
Internet access points in Starbucks coffee shops,
Hilton Hotel, Columbia Sussex Hotels, American
Airlines Admiral Club locations across the United
States.

MobileStar was the first wireless ISP to place a WiFi

hotspot in an airport, a hotel, or a coffee shop.
MobileStar's core value proposition was to provide
wireless broadband connectivity for the business
traveler in all the places he was likely to "sleep, eat,
move, or meet."
A key element of MobileStar's business model was its
formula for making money.
Rather then charging the restaurants & hotels in
which it built its networks, it charged the end users
of its services.
 Problem 1

MobileStar bared all the cost and expenses

associated with installing the network.
They didn’t ask companies like Starbucks or Hilton
to share any of the costs or risk.
So they adopted the approach “ If we build it, they
will come”. But customer didn’t come as projected so
they end up with huge costs and meager income.
 Problem 2

MobileStar didn’t motivate the owners or employees

of the locations to sell the service.
They didn’t have a financial stake in whether the
service succeeded or failed.
The hotspot industry is still alive at restaurants,
hotels, airports, universities and other public places
but now the new companies are charging the venue
for its services; letting the venues charge the end
users themselves.
Question 1.Was MobileStar’s first mover advantage
beneficial for the firm? If not, why not?

Definitely it was not beneficial. Because MobileStar

failed to form a basic business that defines all the
activities of how a firm will compete in the marketplace.
It was in fact first mover disadvantage that they didn’t
know who their primary customers are. They haven’t
planned out customer interface.
 Question 2: Who is MobileStar’s primary customer? What
could those leading MobileStar have done to better identify
the firm’s customers and their needs?

The primary customers are the companies in which

the service has been placed.
MobileStar after the feasibility analysis should have
formed the business model addressing how to surround
potential in market with a core strategy, a partnership
network, a customer interface, distinctive resources, and
an approach of creating value that represent a viable
business.
 Question 3: List of lessons learned from MobileStar’s
experience

Identify your customers

Identify your partners
Conduct a viable feasibility analysis
Don’t go on the mentality “ If we build it, they will
come”. This makes you over confident and results in
failure.
Make a viable business model
Make sure all the elements of a business fit
together and constitute a working whole.