All Things Digital

Wow. Blockbuster is completely out of ideas, isn’t it? This morning the foundering movie rental chain went public with its bid to acquire ailing retail consumer-electronics chain Circuit City.

In a Feb. 17 letter to Circuit City CEO Philip Schoonover, Blockbuster (BBI) offered to pay more than $1 billion for the chain. But, to date, Circuit City (CC) hasn’t fulfilled a request for due diligence necessary to make the bid definitive.

Why? In a conference call today, Blockbuster chief exec Jim Keyes described the offer as “simply too attractive to ignore.” But it seems Circuit City also thinks the offer might be too attractive for Blockbuster to finance. “… To date Blockbuster has been unable to satisfy Circuit City and its advisers that Blockbuster’s proposal could be financed,” the electronics retailer said in a statement. “In particular, Blockbuster’s proposal appears to contemplate a rights offering of unprecedented size relative to the issuing company’s market capitalization and at a price that is at a significant premium to Blockbuster’s current market price.”

Well, yes, there is that. And, of course, there are other issues as well. Like what, exactly, are the synergies between a foundering movie rental chain and a foundering electronics retailer–aside from the fact that they’re both, you know, foundering? If it’s Blockbuster rental kiosks in Circuit City stores, the alliance would seem doomed to failure. Wait. It is Blockbuster rental kiosks in Circuit City stores?

To be fair, Keyes says digital content is important too, and he seems convinced that Circuit City will provide Blockbuster with the infrastructure it needs to distribute video to TVs and mobile devices. “What this combination provides is the ultimate distribution channel for [digital] content,” he said this morning. “It’s not necessarily downloading content to the PC that will ultimately capture the consumer’s imagination. It’s the opportunity to get that content on your TV and your mobile device that is a game-changing opportunity.”

A game-changing opportunity for Apple (AAPL), maybe. But for a foundering, outdated video-rental outfit?

In the grand tradition of Gateway and Palm, Dell is shuttering its 140 kiosks in the U.S. as part of a new retail strategy that will expand sales of its products in outlets like Wal-Mart, Best Buy and Staples.

“We recognized early on that customers really wanted to touch and see the products before they purchased them,” said Dell spokesman Bob Kaufman. “That led us to the kiosk model. Now, customers can touch and feel our products before buying them at one of our retail partners.”

And better still, they can walk out of one of those partner stores with more than a receipt. You see, Dell’s kiosks (shown above just buzzing with activity) carried no inventory. An odd choice, since consumers typically like to take their purchases home after they’ve made them. Just ask Apple, which has carved out a nice little brick-and-mortar retail business for itself by stocking the products it sells.

As George Whalin, president of Retail Management Consultants, noted back in 2006 when Dell first debuted its kiosks, stores that carry no inventory risk frustrating shoppers. Said Whalin: “I don’t think that works as well, particularly for consumers. Walk into a major consumer electronics store, and they have a selection of TVs you can choose from, compare, load up in the back of your pickup and take home.”