The problem is that there's no standard codec for HTML5. The main contestants are H264 and Theora, and so far, it seems like on the browser side of things, Theora is winning out; with a Theora video you can cover Firefox, Chrome, and Opera users - whereas with H264 you miss out on Firefox and Opera users. Since Firefox is by far the largest HTML5 browser, encoding your video in H264 alone is shooting yourself in the foot.
Theora isn't in any position remotely favourable. And definitely not "winning out".
It helps that H264-specific chips are available on just about any mobile device, whereas Theora (or other possible patent-free contestants, like Dirac) does not have this luxury.
Dedicated mobile hardware is a necessity, not a luxury, not until li-ion batteries are superseded by a new breed of whatever with 10 times the charge.