The hard(ware) and soft(ware) of it

Apple Inc, is involved in lawsuits relating to the use of its operating system software on computers with PC hardware. According to this article "German Mac clone maker claims immunity from Apple" is selling Intel loaded computers with Mac OS X operating system software pre-installed. An entry-level computer sells for about $643, relative to the entry-level iMac selling at $1199. The issue is that the end user license agreement (EULA) for the operating system 'forbids' the user from installing the software on non-Mac hardware.

But for Apple's valuation, we have a bigger issue in play, what happens if the anti-trust lawsuits prevent Apple from 'forbidding' the installation of their software on non-Mac hardware? Is the EULA an effective barrier to entry?

Clearly, Apple's strategy is likely to remain the same - product differentiation - rather than them trying to compete in low cost alternatives. Does this news, however, change your expectations of future ROE for Apple? How would you expect the profit margin and asset turnover ratios to change in the next few years? How would this affect your forecasts?

Instant Netflix II

So I signed up for Netflix and bought the fancy new LG BD300 Blu-ray player that allows for Netflix streaming content to be played... similar to the feelings of the author of this article, I was a little underwhelmed by the quality of the picture and sound delived by my fancy little network DVD player...

Regardless, an interesting point is raised by the author, he feels that streaming content was meant to see the demise and eventual end of the DVD. In our case, we focus our comparisons between Netflix and Blockbuster, with Blockbuster a clear second in the agility stakes. In the instant market, though, there are some more players, Vudu, Playstation 3 and Apple TV all have a hand in the market.

What are Netflix's advantages in the instant market? Their disadvantages?

Instant Netflix

Apparently it's just like adding water to instant rolled oats, except instead of water you want an X-box360 with a Live membership (and you can avoid the step with the stove). Put simply, this new method of access to media allows for the consumer to watch their Netflix movies on the same screen they enjoy their X-box experience. See the BusinessWeek story here.

Does this line of business potentially increase Netflix's sources of competitive advantage relative to competitors?

What is blockbuster retaliating with, you ask... find out here.

Does this change your evaluation of the sustainability of this potential source of competitive advantage?

As an aside, any thoughts why X-box 360 outsold the Sony PS3 3-to-1 on Black Friday, and X-box was up 25% from last year's sales?