Netflix (NFLX) has long been the company Seeking Alpha readers (and writers) love to hate.
The idea is that they don't have anything but a business model. And they tossed that away when mail-in DVDs were replaced by streaming. The idea was that the content providers, many of them vertically-integrated, would kill the company by raising prices or just refusing to do business.
Personally I never entirely bought that. The content companies do business with Amazon (AMZN), which should be a bigger long-term threat to them. And Netflix did get its subscription technology into many TVs, as at least two friends have proudly demonstrated to me lately. This gives them a channel.
Still, Netflix wasn't really thought of as a tech company.
Maybe it's time to re-evaluate that.
The Netflix Open Connect Network is more than a way to lower one company's delivery costs. If that were all it were, you'd be right to be skeptical. And you're right to note that this still doesn't solve Netflix' last mile problem with companies like Comcast (CMCSA) or AT&T (T).
As Dan Chernikoff of ZDNet explains this is a potential paradigm shift for all kinds of content providers. Netflix is using commodity hardware, and it has delivered open source software, enabling anyone with significant, large-bit content to share get closer to customers at the cost of a rack mount in an Internet Hotel.
Content providers can thus use Netflix' CDN to reduce their costs, or they could deploy the technology themselves. This lets a lot more companies do what Google did in the last decade, when it first shipped "Google in a Box" to ISPs. As it developed, this became a way for Google to sell its services to many businesses , since they could securely cache applications, and their own content, close to their offices, under control. This has also been scaled down for use in remoter corners of the world.
So Netflix bulls should be wary, because the previous paragraph includes today's secret word. The word is Google (GOOG). A scaled, intelligent core ISP (as opposed to a phone company) can use this same open source technology, and this same commodity hardware, to broaden its reach and lower its costs, too.
Netflix' only advantage then becomes focus. It defines its business narrowly, as video delivery, while Google sees itself as providing all types of Internet services. We'll see if that's enough.