Tuesday, December 16, 2008

A Tale of Two Albums: Wal-Marts's AC/DC Gamble a Hit -- Best Buy's Bet on GN'R a Miss

A tale of two new rock albums by vintage rock bands -- and two enormous bets on the part of superstores. Wal-Mart had the exclusive on AC/DC's well-reviewd comeback album, "Black Ice," and has scored with it, selling 1.6 million copies in the U.S. alone. Best Buy, on the other hand, chose to gamble on Axl Rose and Guns N' Roses long-awaited "Chinese Democracy" album, and what a gamble it was. To date, "Chinese Democracy" has sold only 318,000 units. And, Best Buy had to guarantee 1.3 million in up front sales, so any shortfall is a direct loss. Axl may not mind; Interscope and Universal Music may not mind (they both get paid); but, Best Buy certainly is "estranged."

Reality Bites the Apple

Times are tough all over, including Apple. Research analyst firm NPD Group reports that U.S. sales of Macs actually dropped (1%) last month from a year earlier, a month in which worldwide PC sales actually (and surprisingly) grew 2%. Apple, of course, is not known for offering special discounts or promotions. But, in this recession, Apple may need to rethink its premium pricing strategy. Don't expect any strategic pricing changes prior to the holiday season, however.