How Apple’s big secret could spoil Netflix’s amazing run

“Shares of Netflix remain within a few percentage points of their all-time high. The video-rental firm has had quite a run, with its shares up more than 150% in the past 12 months and nearly 1,000% in the past three years. Even lackluster forward guidance issued on the evening of Monday, April 25, only put a modest dent in this highflying stock. But behind the scenes, a major problem looms. And that problem’s name is Apple,” David Sterman writes for StreetAuthority.

“Any day now, Apple is expected to announce the formal opening of a massive new data center in Maiden, N.C. This center has been ready to go for several months, with its opening possibly delayed by plans to start building an identical data center right next door. Why should investors care? Once these buildings are open for business, the entire Apple business model will see a complete overhaul. And Netflix may be in the company’s sights,” Sterman writes. “For that matter, a raft of other technology firms could see a completely altered competitive landscape as well.”

Sterman writes, “It’s not just Netflix and Sirius that should be worried. An increasing number of consumers are tiring of expensive cable bills that deliver many channels they’ll never watch. A la carte access to specific channels could be part of Apple’s master plan as well. With 500,000 square feet of data center space about to come on line, Apple will have ample capacity to deliver such specialized video delivery services. When a second identical facility opens for business down the road, Apple can move even deeper into this niche. By then, cable firms such as Time Warner Cable may also have plenty to fear.”

Much more in the full article here.

[Thanks to MacDailyNews Reader “Carl H.” for the heads up.]

Related articles:
Apple’s final frontier: The living room – April 13, 2011
Apple updates Apple TV with live MLB, NBA streaming, Netflix, Dolby Digital 5.1, and more – March 9, 2011
Cringley: Apple will buy Time Warner Cable in 2011 – January 7, 2011

69 Comments

  1. I can’t wait to watch this all fall into place… There is so much talk about how Apple is ruining commerce; but really, isn’t Apple just making things right? Aren’t we all going to finally get what we should have had all along? Freedom to choose what we pay for… Freedom from buying crap… Freedom…

  2. Actually, it is the cable companies that have the most to fear, because Netflix is already a pretty good value, but cable tv is not. Plus, I don’t think it is likely that the power of this data Death Star is coming online all at once. The future will arrive one piece at a time.

  3. Honestly I think Apple is content to let Netflix do its thing. Fact, content providers fear/hate Apple. Content providers don’t necessarily hate/fear Netflix.

    Remember people Apple IS a hardware company and they make mega bucks selling hardware. To sell some types of hardware you need content. For the most part I bet Apple doesn’t care where the content comes from as long as people by their hardware.

    Just saying…….

    1. Factually, Apple makes Mac OS X, Final Cut Pro, iMovie, QuickTime, FaceTime, Aperature, iWorks, Safari, iOS, iChat, GarageBand, iCal, iDVD, iPhoto, iSync, iWeb, PhotoBooth, SoundTrack Pro, Compressor, Shake, Mac OS server, Xscan and owns FileMaker Pro 🙂

      Apple is AppStore galore as in Software!
      Apple is also HW.

      1. Really?? I guess my 22 macintosh computers, dozen iPods, iPhones and iPads were figments of my imagination (sure they had SOFTWARE but without the devices that Apple makes–the HARDWARE, the software wouldn’t be the same…).

      2. GOOGLE is a software company, they don’t ever really build hardware, and there flagship product is google search, a piece of software.

        apple is a /hardware/ company, yes they write software, just like every other (good) hardware company (as the saying goes “software sells systems”) but, there flagship product is Macintosh, a piece of hardware

      3. NO.

        I’m sick to death of this decrepit, ancient olde argument. Apple are THE company that marry HARDWARE & SOFTWARE. That specifically makes Apple unique and masterful in the computer community.

        HARDWARE & SOFTWARE

    1. They don’t “get” PEs, PE is a function of share price to earnings. It’s not awarded. A lower PE is better anyway. A high PE like NFLX has right now indicates it being way overvalued thus more likely to fall.

      If you are an Apple investor, you should be glad they have a much lower PE. It means their share prices are more fairly valued and they have lots of room for share price growth.

      If I had some investing money to play with, I’d short NFLX right now. Especially in light of what Apple might have up their sleeve.

    1. The only problem with the Netflix streaming service is its limited offering. There are many, many titles not available. I would be willing to pay a little more for all of the content.

    2. It might also be helpful to offer closed captioning. While Netflix and Hulu allow pass-through of caption info on computers, no one has figured out how to stream television shows with captions intact. Who cares? About 50 million Americans estimated to rely on captions for some or all their viewing.

      1. Yep, the studios are gearing for a fight, the dinosaurs are being drug kicking and screaming into this century and they don’t like it.TOO MUCH consumer choice, not enough obscene profits. I love my NetFlix, and have been hoping Apple doesn’t buy them, so they in conjunction with Apple can beat down the content producers. Competition is good for the market.

    1. My ISP is Time Warner. I would LOVE to see Time Warner’s wicked ass whuped red and raw. Thankfully, where I live, I’ve got other options for both fast ISPs and cable TV.

      For those stuck with only TW as a choice I could see nasty retaliation on TW’s part via destruction of Net Neutrality, effectively blocking competitors such as Apple and Netflix. TW have already attempted to perpetrate pay-per-byte price gouging fees for downloading that often costs more than the cost of the movie downloaded. Thankfully, so far TW have been repeatedly kicked in the ass for their dirty tricks.

  4. Netflix will continue to do well. Their mail delivery service provides functionality to places without stellar connectivity. The Apple cloudflix will not.

  5. Currently, iTunes movies/TV/podcasts, and Netflix movies are unavailable in my Apple TV 2..

    Curiously though, YouTube, MobileMe, Flickr, Radio and ‘In Theaters’, are all up and running.

    What gives?.. Anyone else see this phenomena or just me?

      1. i have noticed from time to time, Netflix particularly, can’t connect/down when i try and use it. a restart always fixes the problem. Odd i have to do that though.

        I can watch one episode on Netflix, go to watch another in same series… “Netflix is currently unavailable” yet i can fire up netflix on ipad, iphone, mbp etc. restart the ATV2 and good to go.

  6. Being and Apple and a Sirius investor, I can’t see how Apple beats Sirius in cars. I used up 20% of my data plan streaming CNBC in what seamed to be minutes. How can Sirius’s UNLIMITED streaming of data and exclusive content be beat for $12.95? Unless someone comes up with a better, cheaper and more reliable delivery system in cars, Apple is not a threat to Sirius. Just another author that doesn’t do his homework. I would’t want to own Netflix on the other hand.

    …..If Apple was a threat to Sirius, Sirius should have been long gone by now. How many Ipods and Iphones are out there that can be connected to your car stereo for free? It’s about content and price and a cell phone data plan won’t cut it.

    1. I am very suspicious of the amount of data they claim you can stream. I bought a 3G iPad1 with the intent of using the 3G when on vacation and such. I blew through my data in just a few short days, without much heavy surfing (no videos, no downloading). In fact i was so put off by how little I got out of my data plan, I havent activated it once since, and now I regret buying the 3G iPad.

      I really think someone should look into this. I think the data throughput is inaccurate.

      1. Interesting… Though most of my usage happens at home on WiFi, I always use 3G when I’m away from the house – I never both connecting to local WiFis because they’re usually more trouble than they’re worth for a marginal increase in speed. I also have the unlimited iPad plan.
        But that said, in the past year (almost exactly) I’ve used only 628 MB up and 6.4 GB down on my 3G plan. And that’s including the occasional movie stream, lots of regular surfing daily, downloading magazines, etc. I find it odd that regular light surfing blew through your allotment so quickly.

        1. I must have my internal autocorrect filter feature in my brain activated, because I read “bother” immediately. But even my filter couldn’t figure out what “goolagong” meant in my wife’s text a few days ago. Apparently she tried to type “cool” wrote “gool” and autocorrect figured she meant “goolagong”. *rolls eyes*

      2. I would be suspicious if I where you. Living in Thailand and using my iPad for at least 4 hours a day on 3G. In the 6 months I’m using it now, I’ve received 11.7Gb of data and 1.2Gb of data sent.
        My contract cost me 600 Thai Baht ~ USD 20.00 p/month and has in principle unlimited data with the notion “within reasonable limits”. I don’t have internet at home right now due to renovation, so all my home-internet is over 3G. Heavy web-surfing, lots of YouTube video’s, music, downloading apps and everything else done every day.

        Personally, I’m very surprised by the little amount of data I actually use. Thought at start that I would blow through 5Gb a month easily.

Reader Feedback

This site uses Akismet to reduce spam. Learn how your comment data is processed.