He's selling to my wife. My teenagers just plug HDMI into the computer (from the TV) and go find the shows they want. He's already lost, but it will take him 5 to 10 years to know it.
To answer one person down there, yes, I had to tinker with the PC about 5 minutes (Ubuntu 10.04) to get drivers and settings correct, but HDMI works great after that. (sound, aspect ratio, it's all good!)
I remember thinking how offensive it was when Jobs said that and then announced the App Store only a few months later. It was obvious that they couldn't have pivoted that quickly, so Jobs must have been lying through his teeth.
It was only later that I learned that the App Store infrastructure was already being built with the iPad in mind, so they could indeed have retargeted it to the iPhone almost overnight. Jobs may not have technically been lying about their intention to keep third-party apps off of the iPhone.