As Netflix Ends Qwikster, Eyes Turn to Sprint, Sony, Microsoft and Apple
byOct 10th 2011 6:10PM
A dramatic reversal, a cash-crunched carrier, a desperate handset maker, blessings from Europe, and Steve Jobs: The Motion Picture. This is the stuff that will dominate high-tech headlines in the coming days. Here's what to watch as the week unfolds.
1. Netflix (NFLX) slows down, reverses course
Not even a month after it was first announced, the Qwikster experiment has ended, and investors couldn't be happier. Give CEO Reed Hastings credit for having good intentions. Qwikster was devised as a way to enable focus on the company's DVD-by-mail service while opening the door to video game rentals by snail-mail subscribers. The hope? Milk a cash flow (i.e., the DVD-rental business) while upping the ante in a long-standing competition with DISH Network (DISH) subsidiary Blockbuster.
"We realized that streaming and DVD by mail are becoming two quite different businesses, with very different cost structures, different benefits that need to be marketed differently, and we need to let each grow and operate independently," Hastings wrote in a blog post announcing Qwikster.
No longer. In this morning's blog post, Hastings said that Qwikster would "make things more difficult" for subscribers. Thus, everything stays at Netflix.com. What we don't yet know is whether the end of Qwikster also means the premature death of video-game rentals for DVD-by-mail subscribers. Keep a close watch, investors.
2. Sprint Nextel (S) craving cash
Apple (AAPL) may have disappointed its own shareholders when it failed to introduce an iPhone 5 last week, but their pain is nothing compared to the anguish Sprint investors are feeling. The stock is down more than 25% over the past week, and finished off close to 8% today.
Sprint's newfound relationship with Apple may be partly to blame. On Friday, the company told analysts it will probably raise capital to complete the buildout of a 4G wireless network designed to compete with larger, better-funded rivals. Management also won't confirm or explain Clearwire's (CLWR) role in powering the new network, which is to be based on the LTE standard backed by both AT&T (T) and Verizon (VZ). The ambiguity won't last long -- investors won't tolerate it.
3. Research In Motion (RIMM) bumps it up
Trying to fill a gap left by Apple, the BlackBerry maker is turning to near-field communications (NFC) technology to allow users to tap handsets together to share contact information, documents, and multimedia content, among other things.
Yesterday, co-CEO Jim Balsillie announced the feature, called "Tag," in a keynote speech at a conference in Dubai. "BlackBerry Tag is an exciting and innovative feature that makes sharing contact information and multimedia content effortless and seamless," a press release quotes him as saying.
Yet the BlackBerry is hardly the first to get this sort of functionality. For years, an app called "Bump" for the iPhone and Android has let users share essentially everything RIM is promising with Tag by bumping handsets together. The service also works across iPhone and Android devices -- any two handsets with the Bump app on board.
4. Europe likes Microsoft (MSFT) ... for now
Europe already liked Skype, the Scandinavian voice-over-IP provider. Now it likes Microsoft, too. On Monday, the European Commission approved Mr. Softy's proposed $8.5 billion purchase of the company.
The decision means MicroSkype executives are left only with paperwork, meetings, and all the other hoo-ha that comes with combining two organizations that serve hundreds of millions of customers worldwide. Watch for an official announcement in the next week or so.
5. Sony (SNE) to cash in as Jobs checks out
Finally, in the time-honored tradition of having Hollywood cash in on celebrity news, Sony has bought the movie rights to Walter Isaacson's biography of Steve Jobs. No word yet on whether Aaron Sorkin will pen the biopic, but it nevertheless marks the studio's second stab at chronicling the life and times of the legends of Silicon Valley. The Social Network -- about the rise of Mark Zuckerberg and Facebook -- grossed more than $220 million worldwide after its Oct. 1, 2010, release.
Motley Fool contributor Tim Beyers owned shares of Apple and Netflix at the time of publication. Check out Tim's portfolio holdings and past columns, or connect with him on Google+ or Twitter, where he goes by @milehighfool.
The Motley Fool owns shares of Microsoft and Apple. Motley Fool newsletter services have recommended buying shares of AT&T, Netflix, Apple, and Microsoft, creating bull call spread positions in Apple and Microsoft, and creating a bear put spread position in Netflix.