I was working out, watching the TV, and listening to my Zune (yes I can multi-task) when I saw FoxNews post a brief headline about Starbucks' fourth-quarter earnings. It turns out the upscale coffee retailer saw its earning fall 97%. This headline was quickly followed by news that McDonalds' earnings rose 1.8% over the same time period. Analysts seem to be attributing this to the value priced options McDonalds offers in conjunction with consumers thinking twice about where they get their coffee from (if they decide not to forgo it entirely) in a slowing economy. Another comparison shows that U.S. same-store sales, stores located in the U.S. that have been open at least a year, dipped by 8% for Starbucks and rose by 5.3% for McDonalds. Starbucks has roughly 11,500 retail locations while McDonalds has around 14,500.

I knew that McDonalds was trying to make portions of its image more upscale by offering its things like Chicken Selects and it's McCafe line of coffee drinks and advertising them.

I get the Starbucks allusion, it's funny. However, I never made the connection that such a move was intended to go up against Starbucks as a way to steal market share. I thought they were simply trying to expand their brand... I guess those sales have to come from somewhere.

I remember some questioned Zune's decision to partner with McDonalds to provide free wi-fi for all Zune devices accompanying the launch of the Zune 3.0 platform. Over the past year, Starbucks announced that it would be closing 5% of its U.S. retail locations. In that same time period, McDonalds has exceeded consensus growth estimates over the past 5 consecutive quarters. Right now, McDonalds is a stronger company. Thinking about this quarters earnings and overall profitability, this partnership is looking like a pretty solid decision. As people are going from Macy's to Wal-Mart, so to are they going from Starbucks to McDonalds. In the quest to keep free wi-fi, will people go from iPod to Zune?