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

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

6 Ways to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

10 High Paying Seasonal Jobs in America this Holiday Season

The 10 Busiest Shipping Lanes in the World

5 Most Valuable Brands in China

The 10 States with Highest Substance Abuse Rates Crippling Their Populace

The Top 10 Things to Do Before You Die That Will Echo for Eternity

The 10 Best Selling Items on Etsy

Top 10 Things to Do in Tokyo, the Greatest City in the World

10 Mistakes on Social Media that Can Harm You and Will Probably Get You Canned

The 10 Best Cities to Find Jobs in 2014

The 10 Most Controversial Songs Of All Time to Hit (and get Banned from) the Airwaves

The 20 Biggest IPOs in US History

The 10 Best Places to Visit in Mexico that Are Beautiful and Safe

7 Bad Habits that Age You Beyond Your Years

The 40 Best Fortune Cookie Sayings That Will Leave You Bemused, Befuddled, or Beguiled

10 Foods to Eat Before a Workout to Make Every Drop of Sweat Count

The 5 Best Documentaries On Netflix You Must See

The Most Heartwarming and Inspirational Story Of This Halloween Season, It Will Make You Cry and Jump For Joy

10 Best Party Songs of All Time to Bring the House Down With

5 New World Order Conspiracy Theories that Will Strangle the World

The 10 Highest Rated Movies of 2014

The 10 Largest Container Shipping Companies in the World

The 10 Largest Armies in the World: Who Should We Be Afraid Of?

Best Warren Buffett Quotes on Money You Need to Hear

The 10 Highest Suicide Rates by Profession

The 20 Most Underrated Movies of All Time

The 10 Fastest Growing Companies in America

The 10 Biggest Outlet Malls in USA

The 5 Most Popular Rap Songs of All Time

The 10 Countries that Eat the Most Meat

The10 Most Expensive Countries to Fly To

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!