These people do not get it:

Under a new deal between the two companies, Netflix users won’t just have to wait 56 days to rent Warner Bros. movies on DVD. They’ll have to wait 28 days to add the movies to their queues.

Also under this new deal, pirated movies remain free of charge, free of non-skippable ads, free of five-minute load times, and are now nearly three months ahead of the competition.

iTunes changed the music industry because it was more convenient than stealing. Most people made the value judgment that ten bucks for a clean, legal digital album was worth the alternative of fishing around for files that may or may not be damaged or infected.

Hollywood continues to completely ignore that lesson. It continues to punish the people who play by the rules with an insufferable customer experience. This is the sole reason piracy is up and profits are down: because doing it right totally sucks. And that’s apparently how the studios want it.

TechCrunch has relayed a new NPD report tracking “market share” in the fourth quarter of 2011. It shows a “market share” of 43% for iOS to 47% for Android. I put “market share” in quotes because it’s listed as “smartphone” market share, and it’s not clear whether or not iPod touch and iPad, or the various Android tablets, are (or should be) included.

What interests me much more is the by-model breakdown of sales according to NPD. There are currently three iPhone models available — iPhone 4S ($199), iPhone 4 ($99), and iPhone 3GS (free) — and they occupy the top three slots in that order. This may not be an entirely new phenomenon, particularly not for Apple products, but I still find it remarkable. It contradicts what most people keep insisting is conventional wisdom: that cheap and/or free models will always steal volume from premium models. Despite price and variety pressure from various Android models, and even pricing pressure from other iPhone models running the same exact software, the iPhone 4S was still the top-selling smartphone in the United States (according to NPD, at least). And this report is only for October and November — it doesn’t include Christmas.

You can’t explain this with the usual hand wave of “marketing.” If people are opening their wallets for Siri because of the latest commercials, for example, it doesn’t explain why the iPhone 4, without Siri and $99 more than the free 3GS, is #2. At face value, I wouldn’t think Siri is worth $200 to the average consumer, and I definitely wouldn’t think “speed and a Retina display” are worth $99 to them. Surely Apple Retail staffers are pushing the higher-end models, but I still think the average person will gravitate towards free, especially if nearly all the features are there. (Related: my parents now own an iPhone 4 and an iPhone 4S. I had very little to do with it.)

Even though the 3GS finished “last” among the iPhones, it still outscores any individual Android model, which is again remarkable to me. And it shows that despite what many Apple observers like to say, Apple does in fact care about market share — at least for now. I can’t imagine Apple looks forward to qualifying and performance testing new software releases on two-year-old hardware that isn’t significantly improving the bottom line, but that’s what’s happening. (At the moment, iOS 5.0.1  still performs very well on my old 3GS). More than one high-up person has decided that moving these units at any cost is a current priority. The impact on the user base, and the psychological impact of three iPhones on top instead of two, are apparently worth the trouble.

Two interesting pieces of news hit right before the holidays: first, that Apple has reportedly acquired Israeli flash chip maker Anobit; second, that Samsung is building the A5 processor, which is used in the iPad 2 and iPhone 4S, in a new facility in Austin, TX.

Similar to the 2008 PA Semi acquisition, the Anobit acquisition highlights a continued priority on internalizing improvements to hardware. Most people think of Apple as a hardware company in the industrial design sense, but not necessarily in the R&D or manufacturing sense. However, the last few years have demonstrated that Apple is in fact very interested in controlling and advancing the way its components are built — not just its finished products. Eliminating external dependency is a repeating pattern with Apple, especially in strategically important areas.

The importance of this policy is becoming painfully clear with the Samsung news. It was bad enough for Apple to be giving tons of cash to a competitor for commodities like flash memory, but this A5 news is far more serious. Not only is Apple more dependent on Samsung than we had previously thought, but we now know that Samsung has access to A5 schematics. This is proprietary technology designed in-house for products that make up as much as 70% of Apple’s revenue, and it’s in the hands of a competitor whom Apple is suing for patent infringement. It’s got to be driving Apple nuts.

Just as interesting is the revelation that this new Samsung plant is located in the United States. We’ve been told for years that commodity manufacturing in the US was dead, but here we are with the heart of two industry-leading technology products being built there. Austin’s three-hour flight distance from Cupertino makes supervision cheaper and easier. Even more interesting: Reuters pegs the cost of the plant at $3.6 billion. That’s a lot of money, but not for a company with more than $80 billion in cash and an obsession with controlling its own destiny.

It’s important to remember that Samsung is a Korean company with decades of expertise in this industry. That cost may involve legal and tax advantages that may not be available to Apple, an American company. Samsung’s experience in building and operating these plants cannot be discounted either. At the same time, though, Apple has the gravitas and the cash these days to hire such expertise. And I have to think that more than a few states in this country would give Apple a deal on some land, especially if there were jobs attached. (For real this time.)

Nearly 17 months ago, when Apple had “only” $46 billion in cash, I wrote that I wouldn’t be surprised to see Apple run more and more of its own manufacturing processes. That comment was prompted by the mere threat of product roadmap leaks from a rogue employee. Apple is a lot richer now, and the stakes are a lot higher. Apple is deep into a very serious competitor for both flash chips and processors. And in the last month, it has acquired a flash chip maker and learned the exact price of building a plant right here in the USA.

This morning, Adobe announced that it is discontinuing development of its Flash Player for mobile platforms: a concession from the owner that the technology does not fit into the future of computing.

People are calling this a victory for Apple, for “open standards”, for “users”,  but more than anything it is a victory for Adobe. A belated one, to be sure — perhaps too overdue to even call it a victory — but the company will unquestionably benefit from forgetting the past.

It’s easy to forget that Adobe did not create Flash: it bought it along with Macromedia more than six years ago. Among the other products that came with that acquisition, Fireworks and Dreamweaver have been fairly well-integrated into the Adobe suite. A notable characteristic of those products is that they are tools, just as Photoshop and Illustrator, Adobe’s traditional flagship products, are tools.

Flash is a tool as well, but it is also a platform: a runtime that obscures the browser and operating system in order to give Adobe more control. It is the platform part that has made this saga so unpleasant over the years. Adobe has never been a platform company, yet it felt a need to power forward with Flash. I’m sure that early on there was a serious vision of dominating content delivery over the web, but sometime after 2005 — just as HTML5 technologies were emerging, and ironically right around the time of the Macromedia acquisition — it became a burden. Between the money it paid and the money it had since spent, Adobe’s management seemed unable to just let go. MBAs often call this “escalation of commitment”. It’s now 2011, and only the delusional can pretend that things haven’t changed. After today, everyone at Adobe can exhale and right the ship.

Adobe’s announcement clearly states that only Flash Player for mobile is going away. The tools — the things that Adobe’s customers really turn to Adobe for — can now grow freely to please creatives in new, forward-looking ways.

I truly believe that a long-term Quixotic commitment to Flash Player would have destroyed Adobe from within. It was an expired product that distracted the company from its core competency of making tools for creative professionals. Adobe still has a lot of work to do if it wants to be a real leader in modern web technology, but this is the right first step.

This post had been a work in progress for quite some time. The unpublished draft was much longer, and had the working title ‘Adobe’s Dilemma’. It’s been repurposed and finally published in light of today’s announcement. I like this version a lot more.

Intuit and AT&T have formed what Engadget calls “an unholy alliance” to create a poor, twenty-two-months-late ripoff of Square’s credit card reader for mobile devices. Go ahead and watch the video on Engadget’s site, and compare it with the experience that Square debuted two Januaries ago. Intuit and AT&T knew exactly what they had to rip off, had almost two years to do it, and still laid an egg.

Engadget says “Better watch your back, [Square co-founder] Jack [Dorsey].” But Jack was already watching his back, and Square has moved on to Card Case, a product that ditches both the reader and the card by simply knowing when you’ve arrived at your favorite haunts. The vendor knows it’s you because he’s running an app that has your picture, which is associated with your payment account. Watch the Card Case video — the best thing about it is not the cool geofencing technology or the elegant design. It’s the side effect of a business knowing you’re a regular, and perhaps even knowing what you usually order. It’s an irreplaceable improvement to the customer experience. It’s the soul of the service. It’s the part that margin-drunk giant corporations always leave out.

GoPayment is exactly the kind of uninspired thinking I would expect from a scared monopolist teaming up with a phone company.

UPDATE: Jim Dalrymple has informed me that GoPayment was announced in May 2009 on Sprint’s network, which did not carry the iPhone at the time, six months before Square’s public launch on iPhone. It’s bizarre to me that this week’s joint press release — which I did read before posting my reaction — makes no effort to position GoPayment as an existing product, but facts are facts. Crow eaten.