The buzz has gone out of Starbucks, they say. McDonald's, by rolling out espresso drinks at 14,000 stores nationwide, is going to frappé the vaunted Frappuccino. Rising dairy prices are squeezing Starbucks' bottom line; its rapid growth has diluted Starbucks' soul.

That's what the analysts say. Howard Behar says hogwash.

"There's nothing new here," says Behar, the longtime Starbucks executive and former board member. "McDonald's sells millions and millions of cups of coffee. They've always sold more coffee than we have."

No, the competition is not McDonald's, he says, nor Dunkin' Donuts or Tim Horton's, or even funky independent coffee shops. "The competition is Starbucks. I say that humbly. It's our own mistakes."

When Starbucks chairman and cofounder Howard Schultz returned to the company in January, everyone cheered, from Wall Street to Western Avenue in old-town Seattle, where the company's pioneering Pike Place Market store still stands.

Schultz promised a "thorough and rapid review of every part of the company." He shook up management, warned that underperforming stores will be closed, and hinted that layoffs are possible. (On Feb. 20 Starbucks cut 600 jobs, amounting to 220 employees laid off nationwide and 380 positions eliminated.) Schultz said the pace of new store openings would slow in the United States. Too-rapid growth had meant that "we lost the focus on what we once had, and that is the customer."

But as the calendar turned to February, and Starbucks didn't announce new initiatives, analysts began to wonder -- just what concrete steps did Schultz have up his sleeve? It spawned a bit of a game, trying to read the tea leaves to decipher what's next for Seattle's coffee colossus.

RE-TAPPING THE CUSTOMER

First there was the customer survey. The company dangled a $1,000 prize to those who went online to answer questions about their Starbucks experience -- what did they order and how did they like it? Was your barista friendly, and did he or she know what your favorite drink is? How did you like the ambience, and how do you rate our merchandise?

Then there were a few trial balloons. In the Seattle area, Starbucks introduced a $1 drip coffee option -- with free refills. The company also experimented with a new device, similar to a big French press, to brew individual cups. It announced a partnership with AT&T to provide free Wi-Fi in stores. The company shut down all its stores for three hours of training for baristas. And in a quarterly report, Schultz said the company would phase out breakfast sandwiches, which have been popular -- and profitable -- but are a pain to prepare and a bane to coffee purists, who complained the smell of toasting bacon was overpowering the scent of roasted coffee.

Yet amid all this, Starbucks executives kept mum. The company said it was working on a five-point "customer-facing" plan to improve same-store sales, but wouldn't discuss it until its annual meeting in late March.

In the absence of hard data, many began to focus on Schultz's oft-cited 2007 memo warning that Starbucks was losing its soul.

"Some people even call our stores sterile, cookie cutter, no longer reflecting the passion our partners feel about our coffee," Schultz warned executives. "In fact, I am not sure people today even know we are roasting coffee."

But in an interview prior to his departure from the board last March, Behar warned against reading too much into that one particular memo. "You know how many times I've received that memo in 19 years?" he asked. "Maybe 50 times."

Starbucks' problems are people problems, Behar says. "We'd turned into a 'me' organization instead of a 'we' organization. People were worried about what was on their résumés instead of what they were bringing to the organization."