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Get your DVDs with a side of fries

Starbucks and McDonald's are among a growing number of non-technology companies that are out to transform the way Americans consume technology.
/ Source: a href="" linktype="External" resizable="true" status="true" scrollbars="true">The Washington Post</a

Technically, it's still a coffeehouse. But on certain evenings, when the place fills up with young adults gathered around computer screens, this Starbucks outlet becomes more like a futuristic bar from a science fiction movie.

Gaggles of girls sip lattes as they pass around headphones at listening stations stocked with 150,000 digital songs. Sweethearts sit knee-to-knee on stools picking out their favorite tunes to burn on a CD. "Waiters" and "waitresses" on the other side of the counter stand ready to mix another caffeinated drink as well as to offer advice on the newest new band.

"The overall strategy is to build Starbucks into a destination," said Kenneth T. Lombard, president of Starbucks Entertainment, a division of Seattle-based Starbucks Corp.

Starbucks is among a growing number of non-technology companies that are out to transform the way Americans consume technology.

Customers of McDonald's restaurants can now pick up a DVD rental along with their Big Macs and fries at a growing number of locations. The fast food chain also is testing a kiosk at its flagship store in Oak Brook, Ill., that allows customers to download ring tones for their cell phones and print high-quality digital photos from their cameras. Grocery chains such as Safeway, Albertson's and Stop & Shop are rolling out DVD rental machines. Gap, Eddie Bauer, Lane Bryant and Restoration Hardware are selling CD mixes with company-branded packages. And 7-Eleven stores are stocking a line of pre-paid cell phones.

Tech gadgets are even popular giveaways. This summer, Hecht's department stores offered shoppers who bought $50 worth of Dockers clothing a free Blackberry wireless handheld, and financial services companies like Citibank have promised iPods to customers who sign up for an account with a certain balance.

Buying technology once meant having to trek to a specialty electronics store. But as the prices of laser disks and computer chips have plummeted and as gadgets have simplified, other types of outlets have begun to sell technology and entertainment offerings, turning sophisticated items into commodities like milk and eggs.

'It's about instant gratification'
Josh Bernoff, a media technology analyst with Forrester Research Inc., said the idea of stopping by a retail food chain or other type of store to pick up technology appeals to a modern culture that's obsessed with speed and efficiency.

"It's about instant gratification," Bernoff said.

In some cases, retailers set out to target the last untapped high-tech market: technology laggards, people who might be somewhat intrigued by the new-fangled gadgets, but haven't set aside the time and money to seek them out. An estimated 32 percent of Americans do not own cell phones, according to a 2004 survey by the Pew Research Center, and 38 percent don't own computers, according to a 2003 U.S. Census Bureau estimate.

The surprise, retailers say, is that many of the customers who take advantage of the stores' new high-tech offerings don't fit the mold. These buyers are sophisticated about technology and looking for more seamless ways to integrate it into their everyday lives.

Margaret Chabris, a spokeswoman for Dallas-based 7-Eleven Inc., for example, said the chain thought the main buyers of its Speak Out cell phones would be people having trouble getting an account with a major carrier because of credit problems. The cheapest is $29.99 and there is a flat rate of 20 cents a minute at any time. Another allure is anonymity: there's no need to sign up or get credit approval. But the chain has noticed that many wealthier, tech-savvy clientele have been buying the phones to give to their children or elderly parents or as a backup for emergencies.

"You buy it at the counter, take it out of the box, and you can be talking to whomever you want in the parking lot. There's no having to sign up. . . . That appeals to everyone," Chabris said.

Although the company won't release specific numbers, it said the cell phones are among its top-selling items. In February, 7-Eleven began rolling out the phones in more than 4,400 stores in 43 metropolitan areas, including Washington.

For Megan Flynn, the McDonald's kiosk has changed how she thinks about watching movies. Rather than making an appointment with friends to watch a movie at a certain time, she is more casual now and just likes to have one on hand in case the mood strikes her. Just last week she ran out of time before she could watch a rental movie, the Vin Diesel vehicle "XXX," but did not worry because it was so cheap and easy to rent and return.

"When I first saw this [McDonald's kiosk] I thought it was stupid, but now I think it's a good idea and I use it all the time," said Flynn, 25, an accountant from Minneapolis.

McDonald's experimented with DVD rentals in 2003 when it planted 14 vending machines in some parking lots in the Washington area, but this is the first time the corporation has tried to rent movies inside its restaurants. This summer, McDonald's began testing the movie-rental service in five metropolitan areas. The sixth will be Baltimore, where DVDs will be available for rental starting Labor Day weekend. The rentals cost $1 per night plus tax.

Each kiosk is stocked with 550 disks offering 35 to 40 of the top new releases. The kiosk is refilled every Tuesday. Each rental is due the next day by 10 p.m. at any McDonald's location with a kiosk, which is now limited to outlets in Denver, Salt Lake City, Houston, St. Louis and Minneapolis. By the end of the year, about 1,000 of the 13,700 McDonald's outlets in the United States will feature the kiosks.

"It's about making McDonald's more relevant and more contemporary," said Greg Waring, senior director of marketing for Redbox, a McDonald's subsidiary that operates the DVD machines.

Waring said that in Denver, consumers have rented more than 2 million DVDs and foot traffic has increased in the stores that have the DVD machines.

Starbucks has considered music a companion to its coffee since the company's first store opened in 1971. The Santa Monica store was set up two years ago as an experimental cafe, and the company considers it such a success that this fall it began to deploy "media bars" in other locations. The cafes, mostly in Seattle and Austin, feature computer screens where people can sample tunes and make CDs. The chain also has been selling previously unreleased music such as Bob Dylan's 1962 "Live at the Gaslight" and Alanis Morissette's "Jagged Little Pill Acoustic."

While response to the new Starbucks music stations has been tepid in some stores, the company has done spectacularly with CD sales. At a time when music industry sales are falling, a phenomenon that some companies have blamed on the popularity of free file-swapping services, Starbucks has managed to get customers to pay full retail price for its CDs. Starbucks sold about 775,000 copies of Ray Charles duets in "Genius Loves Company," 115,000 units of Coldplay's "X&Y" and 107,000 of Dave Matthews Band's "Stand Up."

Lombard said the company's goal is to connect with disenfranchised music lovers who want to discover tunes beyond the Top 40.

"It's not about driving coffee sales," he said. "It's about providing the music consumer new ways to acquire and discover music. This is a transformational opportunity."

Staff researcher Richard Drezen in New York contributed to this report.