“Poor Blockbuster Video hasn’t made a profit in years, the stock is down about 90 percent from its 2002 high, NetFlix is cleaning its clock, and nobody – I mean NOBODY – thinks the future looks in any way rosy for this pioneering video rental chain. Steve Jobs to the rescue? Maybe,” Robert X. Cringely writes for PBS. “Where Blockbuster shares are in the toilet, Apple shares are in the stratosphere where the difference between stall speed and cruise speed is so small that almost any turbulence could bring the stock down. Apple has two notable product challenges, which are managing the Intel transition for its computer line and keeping strong its line of iPod music players and the iTunes Music Store against increasing competition from all sides. Apple’s technique for managing both is to be aggressive and to as often as possible surprise customers with good news, not bad. That’s why Apple’s Intel product roll-out is going faster than originally announced – not because it is going smoother than expected but because Apple PLANNED to do it this way and simply look better. So, too, the Intel notebooks are shipping with faster-than-announced processors. Think that was some mistake on Intel’s part or good fortune on Apple’s? Think again: it was all planned. So, too, the continually refreshed iPod line with steadily lowering prices to draw-in more customers and fight-off more competitors.”
“Where Blockbuster is dumb and reactive, Apple is smart and aggressive, but all the maneuvers mentioned in the last paragraph can only help to maintain Apple’s current position. They won’t help the company and its stock price to grow further. That will require a whole new product initiative – one that doesn’t in any way weaken the other parts of Apple,” Cringely writes. “For a year now I have been writing that Apple is aiming to build a video distribution empire to match its existing music distribution empire. We’ve seen some of this take place, too, with Apple claiming to have distributed more than 12 million music videos, TV episodes, and motion pictures through the iTunes Music Store. Down the line we’ll see Video iPods with larger screens, the Video Express wireless access point-cum-H.264 decoder, faster Mac Minis with larger disk drives, and whole new versions of Apple’s seminal Front Row home theater application.”
MacDailyNews Note: Get your mind out of the gutter, Bob. 
Cringely continues, “As soon as Steve Jobs can sort out his legal problem with little Burst.com and finish signing every movie and TV studio to an electronic distribution deal, we’ll see lots more announcements from Apple. Apple values Blockbuster for only two things – its customer list and neighborhood locations. Every other part of Blockbuster is literally useless, as I am sure Steve Jobs has told the Blockbuster folks over and over and over again. He has no use for Blockbuster management, labor, or even all that shelf space. All Steve values about Blockbuster stores are the sign and the checkout counter. By now he has so berated and brainwashed Blockbuster management that they believe they are not worthy and will accept whatever Steve deigns to sell to them or to let them sell to us. By now Blockbuster sees Apple and Jobs as their company’s salvation. They are ready to drink the Flav-r-ade. I’m not at all saying, by the way, that Steve Jobs is wrong in his assessment. Blockbuster IS in trouble and has shown itself to be generally clueless. They probably do need Steve, or someone like him.”
Full article — very interesting, as usual — here.
[Thanks to MacDailyNews reader “Rainy Day” for the link.]
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Why stop at Blockbuster? Hell, just go ahead and buy Sony, Panasonic, JVC, Wal-Mart, McDonalds, and DreamWorks…
Not to mention Adobe…
1st post, eat me Confused1.
A lot of people don’t like Cringely.
I do. I enjoy his articles.
Much better than Dvorak, but that is not saying much.
Browse through his old predictions from a couple of years ago. He is not always right, but he is able to see trends.
I’m sorry, did I miss the anouncement that Apple and b-buster were in talks? How does big Bob know Apple, oh wait, Steve Jobs even cares about b-buster? And explain to me in detail the advantage of buying the rights to a name brand that has the stink of death on it? Sure didn’t work with Napster. Cringley can be entertaining and sometimes insightful, but it seems his premise here is made of smoke.
Why does Apple need a failing brand like Blockbuster when it has a top brand like iTunes ?
Why does Apple need checkout counters when they do business on-line ?
I understand the principle that Blockbuster is a business which is facing extinction and that it’s partly to do with Apple’s success. But I just don’t see why Apple needs to buy Blockbuster.
Might be a good idea – but somehow it seems to cheapen the Apple image. Could be that I just don’t like the pimple faced little punks that think they are rock stars in the Blockbuster near me.
I got a late charge for returning a movie 20 mins late and I haven’t been back to Blockbuster since. That was in 1999.
OK, I finished the article. He does admit to making it all up. Still, why is driving to a store to load up an iPod better than pickup up a DVD there. Or better than doing the whole exchange through overnight mail? His Blockbuster model doesn’t work or me.
And is it just me, or did Cringley slap Steve Jobs’ name all over that piece just to make his harebrained scheme seem more plausible?
As he says, this is an alternate distribution model. The main idea is to get hardware/software into the hands of people who don’t already have them.
People could buy an iPod at a Blockbuster, and download movies in-store. It can also be a benefit to drive people that do not own an Apple computer (or any computer for that matter) to purchase an Apple Computer.
This is not really a discussion on buying a failing brand. This is exactly what Cringly states it is about. Creating an alternate distribution model of a revenue stream that would not interfere with its current revenues.
Why is everyone so quick-to-judge? Relax, calm down, and take a look at the universal picture. Just because “you” can’t see why it is important, people in the “know” understand. After all… there are a lot of things Apple has done recently that we all thought NEVER would happen. You never know…
MDN “maybe”… Maybe a good idea? or not?
LOL. Macromancer… late is late. What are you, Clinton in trying to redefine words?
OK. Follow me here. I doubt there is any validity here…. but what if you you don’t have broadband, or something… and you go to the Blockbuster store with your iPod, download the movie using some sort of Mac POS, and voila, go home and watch your movie. I don’t know… could be something there… some sort of market. Maybe you own the movie… maybe it’s timestamped and deletes after a certain time..,.. I don’t know… but just something that popped in my head….
…. hey,I’ve been drinking… cut me some slack
netflix is the thing to buy. Online customer base established. Would you like to download the lo res version or wait for the dvd in the mail? All Apple has to do is add the “download now” button.
Blockbuster is dying from the pay per view cable companies and Netflix.
Apple would be idiots to buy it, much like the author already is.
MacDailyNews Note: Get your mind out of the gutter, Bob.
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Ha!
The idea is not bad except the part where you have to drive down to the store to load the movie. Why not load it to your computer and then to your iPod?
This sounds great, and I would be first in line as a consumer…BUT…
Bloockbuster is losing waaaaaay to much money. This would take a really long time to mature into something that would be profitable, and would only last until higher speed broadband became ubiquitous.
I’d rather see Apple buy Adobe.
What advantage would such a thing bring? None.
What disadvantages would it bring? Tons.
I’m Australian. We have Block Buster, Video City, & Video Ezy I think are the three biggest companies. Does America have Vid Ezy & Vid City ? Why is Block Buster losing. Are they the dominant company ? MAybe Apple should buy Block Buster (if they are thinking of it) just to get the retail space and turn them into Apple Stores. I think the future of video on physical media (discs,usb drives, cartridges whatever) is slowly dying.
SUCKS!!!!!!!!!!!!!!!!!!
Always has, always will!
Hmmm…not a bad idea.
Apple has proven to be a excellent brick/mortar retailer. Imagine all those blockbuster stores turned into…
“The iTunes Store”
Does America have Vid Ezy & Vid City ?
No
Why is Block Buster losing?
Netflix and pay per view via cable is kicking their butts.
http://www.netflix.com/HowItWorks?hnjr=8
With Netflix it’s like $10-20 a month and you can have 3 or more videos out at a time.
Watch a movie a night for less than a $1 a day.
Don’t have anything like this?
This guy rocks. Don’t forget to watch his video series with computer geeks at PBS:
http://www.pbs.org/cringely/nerdtv/
Yeah right, DUMB idea…Bob, did you look at Blockbuster’s financials? they have $1 billion in DEBT, and have an equity market value $700 million. Apple should pay almost $2 billion (to buy them at some kind of premium and repay the debt) to get a money losing franchise so they can load up a bunch of xServes? NO WAY.
If this is the future, then the smarter way to do it is to use the existing Apple store infrastructure to test it and then figure out a good, cheap way to increase the number of distribution points IF it works well. This guy needs to think a little and do some research!
I am strong and revered. I should buy a withered and dying limb to improve my position.
Apple should buy Boeing
ummmmmmm…… no.
Just buy the U.S. Government. It’s CLEARLY For Sale!
Buy 7-11
Think what you want about Cringely, but some people here didn’t read his article, completely.
As some have noted, Cringely is trying to point out that there is another market of potential customers that Apple is NOT reaching with its current approach. Cringely notes, it doesn’t have to be blockbuster, it could be another retailer, like Hollywood video. He’s just marrying one company’s need with another’s. He’s trying to make one plus one equal three. Sure Blockbuster’s current business model is weakening, but that’s the point, it’s cheap.
I don’t agree with the idea, but he has a point, that Apple still has a long way to go, and at least he’s throwing out ideas.
In ordert to create a new distribution channel, they should put some ATM like machine to plug your iPod and download video at gas stations. Everybody needs to go there anyway.
Thinking of Jobs as a savior is foolish thinking. Don’t believe me? Ask Jobs himself.
Blockbuster is akin to antimatter; they have explosive potential so profound no scientist has yet grasped the potential, not to mention the sound of a witch’s anathemas in some unknown tongue. As a business model, Blockbuster is to be cursed or damned, greatly reviled, loathed, and above all, shunned, or so I believe.
Certifying Blockbuster would be akin to certifying a church free of perverts; it’s a stillborn concept, one not unlike a music subscription service.
If it needs a savior, Apple doesn’t need it, me thinks.
Thare’s a difference between God’s will and Cringly’s swill.
Roxio should buy Blockbuster, it’s what they do. There is no value in it for Apple.
Now buying 7-11 so they could put iPods and Mac mini’s on the shelf is not that bad of an idea.
Blockbuster is going nowhere. The brand may be worth something, but the business is slowly dying.
I have Homechoice coming down my telephone line. Not only does it give me my Internet connection and multicast a whole bunch of digital TV channels, but I can also buy films to watch whenever I want. They always have the film I select, I get 24 hours to watch it, and I don’t have to worry about getting anything back to the shop on time. Importantly it also plugs straight into the TV and doesn’t require a computer to run, so anyone can use it.
So what’s the point of joining my local Blockbuster? As Video on demand services expand out from the major cities and DSL prices go down, all the old video store type businesses are going to go to the wall.
In Colorado, McDs have installed “RedBox DVD” rental stations. They have just increased the capacity of every rental box to 500 DVDs. Rentals are $1/day + tax. And you can return it to any RedBox; not just the one you rented from. The profits are so huge on this as are the increased traffic to McDs. Blockbuster is taking a beating here.
BTW, I can see AAPL going down today just because of this story being written. Remember when AAPL dropped when the rumor was that they were buying Universal Music!
Final thought, the Blockbuster locations are often in neighborhood strip malls. Apple looks to find trendy retail locations, with lots of traffic. I see no advantage for Apple here.
BTW, 1, possibly 2, new Apple Stores are being built within 10 minutes of Boulder, CO.
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So is this the new thing? Rumors about which broke company apple should buy next? Could it be that these companies are releasing these rumors to get a quick bump in their stock?
Hey, maybe Real can buy Palm and Blockbuster, and then Napster can buy them and do absolutely nothing with them.
I like Cringely but I think he’s wrong here.
If Apple was going to do distribution this way, Apple would do better to place kiosks with partners with brand-names like Abercrombie, or with 24/7 retailers, like CVS.
>>>>> Turd Ferguson
Why stop at Blockbuster? Hell, just go
ahead and buy Sony, Panasonic, JVC,
Wal-Mart, McDonalds, and DreamWorks…
Not to mention Adobe…
From what I’ve read in the past couple of weeks, Apple should buy …
(a) Adobe
(b) Palm
(c) Tivo
(d) Burst.com
(e) Creative
(f) Blockbuster
(g) … I’m sure there were others
Forget about buying Blockbuster, buy the rights to Blockbuster’s videos for streaming.
Hmm… it sounds to me like another one of Cringley’s wet dreams.
Blockbuster Video’s problems were mainly caused by that whole “No late fees” fiasco. Sure competition with Netflix is hard on their business. Blockbuster is even trying their hand at mail-order video rentals also, but Blockbuster is still filled with customers renting movies and games from inside of their stores.
To say that Blockbuster is in the toilet because they don’t want to sell movies, videos, and TV shows for a little two inch screened devices is absurd. I can barely make out letter-boxed movies on my 20″ TV. I am not interested in seeing stuff on my little iPod screen. Sorry guys.
Blockbuster has their place in the world.
Blockbuster’s problem is that you have to get off your butt to rent the DVD.
Netfix’x problem is that you have to wait for the DVD in the mail with the typical turnaround of 6 days.
Apple’s advantage is that you can have scheduled downloads so that you cna watch stuff whenever you want. Plus add in realtime DLing and decoding and you’ll have instant gratification.
I get the point about a lot of people not having broadband. But the fact is that by the time this business matures fewer people will not have fast internet access.
Personally, I like Blockbuster’s mail order DVD service better than NetFlix. The mail turn around is super fast (I usually receive a replacement DVD 2-3 days after shipping one back). They both have huge DVD catalogs (though you can get NC-17 versions and some more obscure indie films thru NetFlix that aren’t available from BB). Blockbuster and NetFlix have the same pricing on their various plans, starting at ($10/mos for 1-at-a-time).
The big advantage Blockbuster has over NetFlix is their free-bonus in-store rentals. Depending on your plan, you get 2/month or 1/week. Just print off the coupon from the Blockbuster website and take it to any local Blockbuster store when you want to pick up a last minute choice rather than waiting for it to be mailed from your online rental queue.
OnDemand movies from cable are ok occasionally, but for $4 I want the extras that come on a DVD too.
pino:
1st post, eat me Confused1.
Second post asshat! :p
BlockBuster blew it with there online rental scheme claiming no late fees but in actuality after seven days they charge you for a full dvd! That’s where Netflix cleans it’s clock with no late fees and no late fees means, no late fees period! Why Apple should buy Blockbuster I have no clue, why would they want to? Just like why would they want to buy Palm? There software sucks when it comes to Mac compatibility. Treo 650 keeps getting sync errors and duplicating the address book when it does. Always have to remove palm.hs files and that only works for like a week but that’s Palms only answer. They never update anything.
No. Apple SHOULD be buying Adobe. I’m dead serious. Now is the perfect time.
John,
You are full of crap. I have Blockbuster online and have NEVER been charged a late fee for having a rental out for a month or even two. Get your FUD straight. They discontinued in store fees but charge you a restocking “fee” after having it out for 12 days or something. Some insane amount of time. If you can’t bring a movie back in store in half a month or something (For 1 week rentals.) you deserve to get charged.
I had Netflix for six months and after the honeymoon with their wears off they throttle your account BADLY.