Blockbuster offers to buy Circuit City, Apocalypse Begins

From InternetRetailer.comBlockbusterCircuit City  Video rental retailer Blockbuster Inc. has offered to buy consumer electronics chain Circuit City Stores Inc., aiming to take advantage of the convergence of digital entertainment content and devices best exemplified by Apple Inc.’s runaway success with the iPod music player and iTunes online music store.

“Marrying digital content with devices is going to happen, by us or by others in the marketplace,” Blockbuster chairman and CEO Jim Keyes told analysts today. “Apple clearly has made the most progress in this avenue.”

Keyes painted a picture of Circuit City stores selling customers, along with extended warranties and maintenance contracts, subscriptions to movies, TV shows, video games and other entertainment content from Blockbuster. “For every customer buying a TV set or other form of consumer electronics, Circuit City now can sell a subscription service to digital content from Blockbuster.com,” Keyes said. He said Blockbuster stores also could sell a limited selection of electronics devices provided by Circuit City, and that Blockbuster could place kiosks in Circuit City stores.

Okay maybe the title is a little over the top but I was caught a little off guard by this announcement. And I see many people making comparisons to the vertical integration of products and services that Apple offers (via iPods, iTunes, etc) but this seems like an Apples to Oranges (I couldn’t resist) comparison to me. Will this actually work? Will Best Buy now purchase Hollywood Video? Or Netflix? What about Wal-Mart? They won’t want to be left out of this race? Stay Tuned.

iTunes overtakes Wal-Mart in Music Sales

from the Associated Press release

Clearly Apple has gained with their first mover advantage and their dominance in the MP3 market but I think it won’t be long before Amazon begins matching or beating iTunes for market share of digital downloads. I also think that if and when there are more high demand non-Apple MP3 players are on the market then Wal-Mart can leverage these devices and have more impact and higher market share but not before then. I also agree with Michael Arrington’s assessment that the big music labels know their time has come and gone and are trying to enforce payment schemes to prop up a dying business model (The Music Industry’s Last Stand Will Be A Music Tax). Here is an excerpt from the AP Article.

Apple Inc.’s iTunes online music store vaulted past Wal-Mart Stores Inc. in February to become the top overall music retailer in the U.S., a market research firm said Thursday.

Best Buy Co. was ranked behind Wal-Mart and iTunes, with Amazon.com and Target tied for the fourth spot in January and February, according to consumer surveys conducted by The NPD Group.

The firm tabulated units sold, counting every 12 digital downloads as one CD. It did not count sales revenue, nor mobile music sales.

Cupertino, Calif.-based Apple touted the latest signs of its music retail dominance, noting it has more than 50 million customers. A survey NPD released in February covering annual sales proclaimed iTunes leapfrogged to the No. 2 ranking in 2007.

Itunes has sold more than 4 billion tracks since its launch in 2003, thanks in part to the popularity of its iPod portable music players.

The music store sold around 25 million tracks in 2003. Three years later, it surpassed the 1 billion mark, and by July, it had sold more than 3 billion tracks.

Apple’s rise in the NPD survey also reflects a trend this decade of declining CD sales and rising digital music sales, which favors digital music retailers.

iPhone drops $200, Apple offers $100 Rebate for Early Adopters

Here’s the link to (Real) Steve Jobs Open iPhone Letter announcing the rebate.

Apple iPhone now $399http://www.apple.com/hotnews/openiphoneletter/

I guess Steve really does want an iPhone in every pot. I suspect he sees a barrage of imitators and copycats and improvements so he wants to get the iPhone in as many hands as possible before his brand and this marketspace becomes oversaturated with similar models with similar features.

Oh Yeah. Brande New iPods and new iTouch which is an iPhone without the Phone. Interesting.