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Blockbuster Set Top Boxes and Microsoft Retail Stores?

When Apple first launched their retail stores in 2001, there were numerous predictions why Apple would fail in this market:

"I give them two years before they're turning out the lights on a very painful and expensive mistake"

Of course, Apple's Retail Stores went on to be a huge success:

Saks, whose flagship is down the street, generates sales of $362 per square foot a year. Best Buy (Charts) stores turn $930 - tops for electronics retailers - while Tiffany & Co. (Charts) takes in $2,666. Audrey Hepburn liked Tiffany's for breakfast. But at $4,032, Apple is eating everyone's lunch.

Two reports this past week indicate that Microsoft and Blockbuster are both trying to imitate this success with retail initiatives of their own. Last week, Fudzilla claimed that sources close to Microsoft have detailed plans to open Microsoft retail shops featuring their products. The site speculates that Microsoft could feature their software, alongside their hardware accessories, as well as the XBox 360.

Today, Blockbuster announced that they are bidding to acquire Circuit City. The goal would be to provide additional integration between Blockbuster's content services and consumer electronics:

In the letter, Mr. Keyes implies that he wants Circuit City to sell Blockbusters movie download services, trying in some way to replicate the closed loop strategy of Apple, which makes hardware and software, sells media online and has an ever-growing chain of retail outlets.

This announcement comes in the wake of rumors that Blockbuster is also developing an AppleTV-like set-top box for streaming films directly to televisons.