Starbucks Corporation (SBUX): Can Rubi Save Coinstar, Inc. (CSTR)?

However, the Keurig seems to occupy a different market niche altogether: people making coffee at home or office workers who can’t afford to make a Starbucks run. The Rubi machine would be somewhat in-between, as no consumer and few offices would have one.

Perhaps Starbucks Corporation (NASDAQ:SBUX) is using its deal with Coinstar, Inc. (NASDAQ:CSTR) to test the waters. Just over a year after it agreed to terms with Green Mountain, Starbucks began making its own single-serve machine, the Verismo. Green Mountain bears have argued that competition from the Verismo could contribute to Green Mountain’s undoing. Likewise, if the Rubi is successful, could Starbucks enter the market as a competitor?

Further, coffee vending machines are not new — I walked by one every day on my college campus years ago. Readers may have seen them in the lobbies of hospitals or airports. Global Vending Machine Group lists nearly a dozen different models.

No single company has managed to make a solid business out of coffee vending, even though it has been tried. Those who argue in favor of Rubi must have faith that Coinstar’s vending know-how will allow it to succeed where others have failed.

Rubi isn’t Coinstar’s only hope

Although Coinstar is focusing its efforts on rolling out Rubi, the company has other concepts waiting in the wings: Orango will let consumers purchase refurbished electronics, such as tablets and video game consoles, from a vending machine.

Is there a market for such a machine? If Coinstar, Inc. (NASDAQ:CSTR) decides to push Orango, it would find itself competing with GameStop Corp. (NYSE:GME).

GameStop, perhaps realizing that its own business is threatened by technological shifts, has begun buying old electronics, refurbishing them and then selling them. On the company’s November earnings call, GameStop’s president noted that, in the stores where the refurbished electronics business has been emphasized, sales have “lifted 7%.” Evidently, that’s good enough, as the company intends to expand the initiative to other stores.

Buy or sell Coinstar?

Because of its high short interest, Coinstar could be an attractive buy in the short run. But in the longer term, things are a bit more complicated.

Someone looking to hold Coinstar shares for a long period of time should be confident that either: the company’s bears are wrong, and Redbox will not be going anywhere anytime soon; or that the company is not just Redbox, but a play on the growing trend of vending machine retail.

Both Coinstar bulls and bears should watch the company’s Rubi rollout. Success or failure in the venture could determine the company’s longer-term viability.

The article Can Rubi Save Coinstar? originally appeared on Fool.com and is written by Salvatore “Sam” Mattera.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The Top 10 States With Fastest Internet Speeds

10 Best Places to Visit in USA in August

Top 10 Cities to Visit Before You Die

Top 10 Genetically Modified Food In the US

15 Highest Grossing Movies Opening Weekend

5 Best Poker Books For Beginners

10 Strategies Hedge Funds Use to Make Huge Returns

Top 10 Fast Food Franchises to Buy

10 Best Places to Visit in Canada

Best Summer Jobs for Teachers

10 Youngest Hedge Fund Billionaires

Top 10 One Hit Wonders of the 90s

Fastest Growing Cities In America

Top 10 U.S. Cities for Freelancers

Top 9 Most Popular Free iPhone Apps

Top 10 Least Expensive Private Business Schools in the US

Top 15 Most Expensive Countries in the World – 2014

Top Businesses to Invest In

Top 5 Things You Might Be Doing Wrong With Your Business

Top 5 Strategic Technology Trends in 2014

Top Rags to Riches Stories

Parenting Behavior That Promotes Future Leaders

Top 5 Mistakes Made by Small Businesses

Top 5 Most Common and Potentially Devastating Financial Blunders

Top 5 Highest Paying Jobs for Web Designers

Top 6 Most Respected Professions that Also Pay Well

Top 5 Pitfalls Investors Should Avoid

Top 6 Lawyers and Policy Makers Under 30

Top 6 New Year’s Resolutions for Entrepreneurs

Top 7 Locations to Check in on Facebook

Top 5 Mistakes made by Rookie eBay Sellers

Top 7 eBook Publishers in 2013

Top 6 Health Industry Trends in 2014

5 Lessons for Entrepreneurs from Seth Godin

Top 5 Success Tips from Jordan Belfort – the Wolf of Wall Street

Best Master’s in Finance Degree Programs

Top 6 Earning Celebrities Over 50

The most expensive sports to play

Top 7 Earning Celebrities Under 25

Best 7 Online Courses to Take: Free Finance MOOCs

Top 6 Bad Habits that Promote Failure

20 Most Valuable Soccer Teams in the World in 2013

12 Most Expensive Countries for Foreign Students

Top 30 Most Influential Women in the World

Top 20 Most Expensive New Year Eve Shows

Top 5 Best Vocational Careers

Top 10 Jobs for 2014 by Salary Gain (Predictions)

Top 5 Digital Trends for 2014

Top 6 Things You Can Do To Increase Your Productivity

Top 9 Trending Smartphones in 2013

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!