Netflix (Nasdaq: NFLX) is currently one of the most hated stocks on the market. At the same time, everybody loves Raymond and Apple (Nasdaq: AAPL). The contrast between these Silicon Valley neighbors couldn't be more jarring.
But have you ever thought about how similar Netflix and Apple actually are?
This is true on a very fundamental level. Netflix cloud architect Adrian Cockcroft just published the script for a speech he gave at a social-media conference in November, and this passage really drives home the Apple influence:
Who works at a company that has more than one product line? Do you get along? The problem is that the company loses focus and has trouble allocating resources where they are needed, so there are big fights. Pick one big thing and do it well. For Netflix, our addressable market is everyone in the universe who likes watching movies and TV shows; that should keep us busy for a while.
And for Apple, the "one big thing" right now is the iOS ecosystem. From the iTunes store to iPhones and iPads, everything Apple does is tied into this singular vision of a complete entertainment platform. The success of one piece of this puzzle enhances the prospects of all the rest. Apple doesn't need to go looking for entirely new markets, because the current model just works.
The Netflix vision is more narrow than Apple's because the company is smaller. At the moment, the target is even smaller, as Netflix focuses on the long tail of filmed entertainment. Coinstar (Nasdaq: CSTR) and Blockbuster can fight all they want about the freshest releases, because this company plays in a slightly different sandbox. But the single, overarching principle is no less enormous than Apple's.
The dream of achieving an even tighter focus on just digital video streams at the expense of DVD mailings got Netflix in a heap of trouble. All things in moderation; CEO Reed Hastings forgot about that parable for one terrifying moment. He's seen the error of his ways and is not likely to make the same mistake again.
However, as Netflix moves out of its dark time, the continuing focus on its overriding end goal leads me to believe that the company is firmly back on track. Hastings is human and very well might shoot himself in the foot again. Rivals still might invade the company's staked-out territory, damn the torpedoes and full speed ahead. Then again, Netflix's vision holds enough promise to outweigh these risks and then some.
Is Netflix the next Apple or a ticking time bomb just waiting to implode? Add the stock to your Foolish watchlist, and you'll be sure to catch every nuance as the Netflix story develops.
