* MobileStar’s Mistaken Belief If We Build It, They Will Come,…
In 1997, MobileStar was launched to manufacture, sell and install wireless “hotspot” networks. A hotspot is an area in which high-speed wireless Internet connectivity is available.
The idea behind its success was to install hotspot in public places such as hotel lobbies, restaurants, and places that business travelers and others could log on to the Internet via their laptops. ẹnjoyed first-mover advantage. It stuck with Hilton, American Airlines, Starbucks and many other companies. Starbucks allowed it to networks in 500 of its locations.
A key element of MobileStar’s business model was its formula for making money. Rather than charging these companies in which the networks were built, it charged the end users. The price of its service was $15.95 to $59.95 for a monthly subscription; and around $2.95 per hour for people who bought prepaid cards. took all the costs associated with installing the networks; and hence, incurred substantial up- expenditures.
By late 2001, MobileStar failed. The business model just wasn’t variable. What went wrong ?
The hotspot industry is still alive, and an increasing number of restaurant, hotels, airports and other public places are offering wireless connectivity. These companies pay a fixed service fee to the ventors; and are responsible for all installation costs.
1.State the 2 potential flaws of most business models. Which of these 2 potential flaws forced MobileStar’s failure ? Discuss