Apple Protects Its Flank with Netflix Streaming on the iPhone

Last Updated Aug 26, 2010 4:29 PM EDT

Apple (AAPL) finally allowed Netflix (NFLX) on the iPhone and iPad touch. Netflix customers will be able to stream TV shows and movies and get their fix wherever and whenever needed. Why did Apple take so long to approve Netflix and then OK this while in negotiations for a 99 cent per episode TV program rental deal with the networks?

Because, for the weaknesses he does have, Apple CEO Steve Jobs is often canny. The collection of actions form smart tactical maneuvers protected the company's broad product and service strategy as long as possible and also avoided competitors getting too much of a leg up.

Apple has proven time and again that it is interested in controlling as much of the environment in and around its businesses as possible. On the iPhone and iPad front, that means owning the operating system and the hardware, running the one source for apps, and having iTunes being customers' main media squeeze. Want music? Books? Video? Head to Apple's online haven. The company clearly has a deep interest in being a channel for television and movies. It has Apple TV (with a new version rumored). There is plenty of material to download. And, as my BNET colleague Ben Popper has said, Web-based TV will replace cable subscriptions.

But you can get video from all sorts of places, including YouTube, the giant video site run by competitor Google (GOOG). And rumor has it that Netflix Is working on a streaming app for Android. Apple can't afford to let anyone, particularly Google, get ahead on making video available.

There's already an iOS version of Hulu available, and Netflix was already on the iPad. Moving it to the iPhone as well was a necessary step. Even if Apple doesn't get the download revenue, it still owns the customer relationship (and the valuable information that comes with it) and prevents a lock-out on any front. Sometimes you have to make choices. Apple has again exhibited its grasp of complex product strategies and its willingness to let go of one goal to keep a more important one.


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    Erik Sherman is a widely published writer and editor who also does select ghosting and corporate work. The views expressed in this column belong to Sherman and do not represent the views of CBS Interactive. Follow him on Twitter at @ErikSherman or on Facebook.