Will Apple's Infrastructure Investments Mean Buh-Bye to Netflix As Video Download King? (AAPL, NFLX)

Is Apple AAPL about to slay the golden Netflix NFLX goose? Apple has ordered as much as 12 PB of storage capacity, according to a rumor on storagenewsletter.com. The capacity, equivalent to one million GB, is thought to be slated for managing the video download of Apple's iTunes customers. Those following Apple closely would note that this news comes as the giant nears completion on its massive construction project -- a sprawling, 500,000 square foot server farm in Maiden, North Carolina. What happens when one company combines that much server space with 12 PB of storage capacity? Imagine what iTunes did for music, and apply it to every relevant mass-computing system in place. Jeffries analyst Peter Misek said this morning that the data center will be used to host a steaming video subscription business to compete directly with Netflix. "In terms of content we think some sort of subscription model also makes sense," Misek said. "We are huge fans of iTunes, but that cannot be it from Apple. There is another level coming here and we see this as one of the most fruitful potential uses of Apple's enormous cash hoard," Misek said. Bernstein Research's Toni Sacconaghi sees a few areas where Apple might be headed, including cloud-based storage, low-cost music streaming, voice interface and navigation services. Tops on that list is quick, cheap video streaming. The acquisition of 12 PB of storage space will allow Apple to either acquire or directly compete with Netflix, depending on how the dollars shake out. This purchase makes it appear that their jump-off into Netflix's waters is more of a "when" than an "if". Netflix is in the process of transitioning the remainder of its content to a cloud network. With Netflix shares trading at roughly 49 times earning, it would have to keep growing at 25-30% per year to maintain its value. Will it be able to keep up that pace if Apple jumps in to the streaming content market?