What if Microsoft did something similar? What if the CEO in 1998 put all his efforts and attention into the Web? Results for Microsoft might have been much better.
Streaming has a unique disadvantage: you have to haggle with each individual content owner.
Yes, it's cheaper to move bits than stuff. Much. But licensing is a pricey hassle. It's a huge part of the comparison, and as content owners get savvy, it will only get more expensive over time.
This should be a signal of how much more right we got the law with physical media. We all want DVDs to be dead, sure. But DVDs would die tomorrow if we just set up an obligatory licensing scheme for this sort of content. If you distribute a movie, Netflix should be allowed to stream it, and pay you a fair statutory fee.
(This isn't some a radical new idea or some Communist scheme, it's basically how radio stations work.)
Until the law is fixed, DVDs will stick around, lingering on.
For my part, I still prefer DVDs because I actually like owning the disc. But more than that, I have a 25 Mbps FiOS connection and somehow at least once a week when I'm streaming something, Netflix dynamically changes the quality. It's more annoying than skipping due to scratch discs and the quality comes out terribly. I have no idea if Verizon's playing games, but as long as ISPs lose out with streaming media, I wouldn't want to bank on that business.
I'm not looking forward to a world without physical media where content providers and ISPs can dick us around with arbitrary pricing for content.
Again, Windows and Office are and always have been the lifeblood of Microsoft. You really think they should have decided to let someone else make all of that money in 1998 and retooled their whole business to keep only Hotmail? I think that would have been disastrous for MS.
Not to mention the diminished role MS has with developer mindshare.
Obviously, Windows is a great cash cow and I'm not saying they should have spun it off. I'm saying a VP should have taken responsibility for it and the CEO should have focused most of his/her energy on the Web.