Keurig Green Mountain (UNKNOWN:GMCR.DL) finally introduced its new Keurig 2.0 brewing platform last week, but the undisputed champ of single-serve coffee may want to start reading up on some business case studies about the pitfalls of flying too close to the restricted usage sun.
Keurig 2.0 is a step up in many ways. For starters, it's the first Keurig that doesn't just dispense java in one-cup blasts. The platform also accepts the new and slightly larger K-Carafe portion pack that brews an entire pot of coffee.
The design is compact and stylish. The display is enhanced and modern.
The new brewer also has a scanning technology that's hailed as a way to optimize each brew. However, the rub here is that the same technology is also being used by Keurig as a gatekeeper. If it's not a licensed K-Cup with the "Keurig Brewed" logo on the lid, the brewer will spit back an "Oops" warning to let you know that you're not going to get your bean water fix.
It's easy to see what's in it for Keurig if java junkies accept the new restrictive feature. Instead of the growing number of unlicensed K-Cups out there -- perfectly legal since its patents ran out two years ago -- folks will have to buy the licensed portion packs where Keurig Green Mountain profits from every sale. Even older Keurig-licensed K-Cups can't seem to play nice with the new brewer. Don't even think about introducing that refillable pod that you used to fill with your own favorite coffee grounds. That garbage gets rejected on the way to the rim like a rookie basketball player trying to post up against Anthony Davis or Serge Ibaka.
Naturally there's going to be some serious flak working against Keurig Green Mountain. If it's not too careful it may repeat Microsoft's (NASDAQ:MSFT) mistake.
Playing Halo on your Keurig 2.0 coffee maker
Microsoft was the undisputed champ of the previous generation of gaming consoles, so logic would dictate that it had the inside track this time around. The Xbox One would be the video game platform of choice with the PlayStation 4 and Wii U fighting for scraps.
It hasn't played out that way. Microsoft introduced the Xbox One during last year's E3 gaming conference with restrictive features that required periodic online check-ins and made it harder to play borrowed or used games. It went on to retreat from most of its policies ahead of the November console launch, but the damage was already done. The PS4 was the top seller during the critical holiday shopping season, and it has gone on to pad its lead with every passing month.
Keurig Green Mountain doesn't have a PS4 waiting in the wings to assume market leadership on this potential miscue, but it will have to deal with displeased customers. The first wave of reviews has been generally negative. The flagship K550 Keurig 2.0 brewer has an average of just three out of five stars through the first nearly three dozen reviews on Amazon. Keurig's earlier brewers generally have far more favorable reviews.
CNET's initial review was also less than encouraging. The reviewer's conclusion was that buyers should settle for one of the older K-Cup brewers that don't carry the label-scanning restriction.
There's a big opportunity here if consumers accept the new normal. Keurig Green Mountain will sell a lot of licensed brews that way. The retailers and coffee brands putting out unlicensed portion packs will have no choice but to play nice. However, just as crafty customers are already figuring out that slapping the label of a "Keurig Brewed" K-Cup will work on rejected portion packs, this could wind up being more trouble than it was worth for Keurig Green Mountain.