“This exclusive partnership offers you the ability to instantly stream movies and TV episodes from Netflix to the television via Xbox 360. Xbox 360 will be the only game console to offer this movie-watching experience, available to Xbox LIVE Gold members who are also Netflix unlimited plan subscribers…at no additional cost.”

– Microsoft on its Xbox 360/Netflix partnership, Aug. 2009

So much for Xbox 360’s game console exclusivity on Netflix streaming. This morning, the DVD-by-mail pioneer said that beginning sometime next month, owners of Sony’s PlayStation 3 game consoles will be able to stream movies and TV shows from Netflix.

The feature, which brings an unlimited amount of online viewing with any subscription worth $9 or more, will initially require an “instant streaming Blu-ray disc” to enable it. Not the most elegant of implementations, but presumably a firmware upgrade will likely follow and bake the feature into the PS3.

For Netflix (NFLX), the deal provides a chance to broaden its subscriber base. About nine million PlayStation 3 systems have been sold in U.S., and more than 25 million worldwide. So the potential for new customers here is substantial. For Sony (SNE), which already offers movies and TV shows to PS 3 users for a $3 to $4 fee, it’s a way of removing an Xbox 360 marketing advantage Microsoft (MSFT) has been lording over it since this past August.

“[A partnership with Apple] is something that’s likely to come over time,” Hastings said. “But nothing in the short term. [With] movie watching, we are not focused on mobile yet, but on the TV, on Blu-ray and on the video game consoles. We will get to mobile eventually, including the iPhone.”

Of course, bringing a Netflix (NFLX) streaming-video app to the iPhone will no doubt take some doing–and a few concessions. Certainly, it seems unlikely that AT&T (T) would be thrilled to have Netflix streaming movies over its wireless cellphone network. So at the very least, the company would have to agree make its app Wi-Fi-only.

Historically, Apple (AAPL) has shunned subscription music services, and fearing they might compete for dollars best spent on iTunes, made it impossible for them to interoperate with the iPod. A few months back, Apple would have likely done the same with Rhapsody, if only to tweak Real Networks (RNWK) CEO Rob Glaser, who infamously disparaged CEO Steve Jobs for his “pigheadedness” at the Digital Living Conference in 2005.

But things are a bit different today. With the Federal Communications Commission’s inquiry into Apple’s rejection continuing consideration of Google Voice for iPhone still fresh in its mind and the outcome of that inquiry still undetermined, Apple might be a bit more inclined to allow Rhapsody into the App Store. It certainly can’t withhold it by claiming it replaces core iPhone functions, as it did with the Google (GOOG) app.

And so we find Apple in a uniquely uncomfortable spot: Accept into the App Store an on-demand streaming music application that will compete for the attention of iTunes users or reject it and suffer further unwanted scrutiny by the FCC, not to mention a nasty public relations nightmare.

The online DVD-rental pioneer said Thursday that its second-quarter profit rose 22 percent on revenue of $408.5 million. It earned $32.4 million, or 54 cents a share, easily surpassing Wall Street’s expectations of 50 cents per share.

Netflix’s (NFLX) subscriber base finished the quarter at 10.6 million, up 26 percent year-over-year and at the high end of the company’s own forecasts.

“We continued to execute very well in the second quarter and are on track to deliver a record 2009,” Netflix CEO Reed Hastings said in a statement. “As our subscriber base and disc shipments continue to expand, and as we offer more opportunities to watch instantly via the Internet, we believe we are striking the right balance between growth, investment and earnings.”

Absent from the new Sirius app are a number of the broadcaster’s more popular channels, among them Howard Stern’s, which Sirius often claims are responsible for driving more subscriptions than any other. Also missing: MLB Play-by-Play, NFL Play-by-Play and Sirius NASCAR Radio.

That the company calls this app “Sirius XM Premium Online” when it fails to include much of the broadcaster’s more popular content is ironic. That it expects subscribers to pay an additional $2.99/month to access it after a week-long free trial is silly (Note: If you are already a Sirius XM Internet subscriber or subscribe to the company’s Premium Online service, Sirius waives that fee). Without Stern and those other channels, there’s really no reason to. There are far too many other ways to listen free music on the iPhone that don’t require a monthly subscription fee–Pandora, for example. Or Last.fm. And NormSoft’s Pocket Tunes app has been streaming Stern for months now.

Surely, Sirius knows this. So why not include Stern et al? Did a rights issue prevent Sirius from doing so? Did it convince itself that Jimmy Buffett’s Radio Margaritaville and Oprah Radio were compelling enough reasons to download the app? Or perhaps the company is planning a standalone Stern app for which it will charge separately. Or maybe Stern is working on that himself.

And seriously, doesn’t Sirius XM pay Stern too much not to include him?

In any event, the app is an enormous disappointment. Which is too bad. Because Sirius really could have used the few additional subscribers Sirius XM Premium Online might have attracted. With the souring economy weighing heavily on the auto industry–-a mainstay of Sirius’s business–-and partner Chrysler navigating bankruptcy, the struggling company is bracing itself for nasty subscriber losses this year.

If this is all that Sirius XM has to offer on the iPhone, it would have been wiser to do what Netflix (NFLX) did with its Watch It Now online streaming service–provide it gratis to active subscribers as a loyalty bonus. Without Sirius XM’s top-tier content, there’s little to differentiate its iPhone app from Pandora and Last.fm. And Pandora and Last.fm are free.

UPDATE: A quick review of the Sirius Internet Radio FAQ reveals that it is indeed licensing restrictions that prevent Sirius XM from offering NFL, MLB and NASCAR via the Internet and presumably via the iPhone as well. Those same restrictions, however, do not seem to apply to Howard Stern’s channels, which all appear in the Sirius Internet Radio lineup.

UPDATE: Sirius XM has declined comment on the Stern issue beyond what was already said in this morning’s press release.

Later today, Perlman–former principal scientist at Apple (AAPL) and the founder of WebTV–will officially unveil OnLive, the online service with which he hopes to upend the $46 billion world-wide videogame market. Seven years in the making, OnLive promises to create an on-demand gaming experience that rivals those offered by dedicated videogame consoles. It’s capable of streaming even the most advanced, CPU-intensive games to television and computer–Macintosh or PC–without lag or a reduction in quality. “We’re providing you with the latest high-end titles, the exact same ones you would see at Target or Best Buy, in the same release windows,” Perlman told USA Today. “But what is really cool is you don’t need any high-end hardware to play them. There’s no physical media. It’s an all-digital platform. You never need to upgrade your equipment at home.”

A compelling proposition. A potentially disruptive one too, if OnLive is able to deliver it with the reliability and ease of use it promises. Said IDC analyst Billy Pidgeon, “It’s a good idea and has potential, but the thing I need reassurance on is being able to deliver this over the network. In games there’s no wiggle room–when you press a button to fire you want to fire,” he said. “But if it works, this could be a disruptive.”

By all appearances, the Pre is a slick little device. But is it formidable enough to stand its ground next to Apple’s iPhone, Research in Motion’s (RIMM) BlackBerry and the groaning board of Android devices currently in the handset market product pipeline? Palm (PALM) certainly seems to think so. In fact, the company is so confident in the Pre that CEO Ed Colligan seems to think it won’t need a sub-$200 price point to pull share from Apple (AAPL), et al. “Why would we do that when we have a significantly better product,” he asked ATD’s Peter Kafka earlier this afternoon.

Well, here’s one reason: To stay in business. Because despite Colligan’s claims of a “significantly better product,” Palm hasn’t raised the smartphone bar much (if at all) with the Pre. In fact, the device is as noteworthy for the features it may not include as for those it does. Absent from today’s grand unveiling was any mention of video. Also missing was a rival to Apple’s App Store and the robust developer-consumer ecosystem Apple has created around the iPhone and iPod touch. Even Google’s (GOOG) Android OS debuted with that. And the name; well, “Pre” isn’t likely to do very much for Palm’s already much diminished brand recognition.

Now, perhaps video and an app store are coming. But even if they do, will the Pre really be worth paying a premium for, as Colligan suggests? I’m not so sure–especially when the inevitable updates to the iPhone and BlackBerry remove the few advantages it does have over those devices. “Fast Web browsing” and “efficient multitasking” just aren’t big differentiators anymore.

That magnetized conductive charging platform sure is nice, though.

UPDATE: Turns out Palm is planning an App Store rival. According to the Pre press release, “The platform’s flexible environment will also allow developers to distribute their applications over-the-air via an on-device Palm application store.” And though no mention was made of video during Thursday’s Pre unveiling, the device will support it–both on the device and streaming. Said a Palm spokesperson, “The Pre has video playback, including YouTube video from the internet.”

PREVIOUSLY:

• Yeah. Those PC Guys Never Stood a Chance, Palm.
• Palm: Spare Change for Financial Viability?
• Alms for Palm?
• Palm New-ness: A Target Price of Zero
• Palm: Hey … Hello? Excuse Me … Over Here!

Netflix’s second-generation player will initially be offered to a small group of subscribers before being made widely available to all those with Intel-based Macs by the end of the year. That means 12,000+ titles available for streaming without having to bother with Boot Camp or other virtualization programs.

This is the second time Bechtolsheim has left Sun, and in all likelihood his last. On Monday, the company warned of a much larger-than-expected quarterly loss on lower revenue. Sun shares have fallen more than 70 percent this year, and they fell lower still on news of Bechtolsheim’s departure.

Sun, still reeling from the beating it’s been taking on Wall Street, claims it’s not losing Bechtolsheim–just his undivided attention. “Andy will remain with the company as an essential product architect as part of the Sun Systems group; however he will be working with Sun in a reduced capacity as a result of his being named Chief Development Officer of Arista Networks, a start-up company he founded,” Sun said in a statement. “Andy will focus his time with Sun on technology development and ongoing systems projects to help drive new product architectures, including X64 servers and storage servers, and will continue to work on key strategic initiatives such as HPC.”

Just how Bechtolsheim will manage that with a new full-time job as chairman and chief development officer of Arista remains to be seen. Although if anyone can do it, he can.

And 80% would pay for a legal subscription-based music service that would allow them to discover, swap and recommend music.

Which, if true, illustrates the great disparity between the consumer and industry views of digital music. Because according to the Hertfordshire study, consumers–at least those in this particular age group–view digital music on the Internet as a sort of giant mixed tape to be explored and shared. They don’t have much of an emotional connection with it: “Respondents seem to attach a hierarchy of value to different formats of music, with streaming-on-demand the least valuable (though still valued); ownership of digital files somewhere in the middle; and ownership of the original physical CD the most valuable.”

The recording industry, of course, has failed to recognize that hierarchy. When, and if, it does, the study notes, it may finally succeed in monetizing that mixed-tape ethos that’s befuddled it for so long. “Survey responses suggest that respondents would continue to purchase CDs and go to gigs, even if they subscribed to a legitimate peer-to-peer file-sharing service,” the survey adds. “Fans want to support or pay tribute to their favorite artists and ownership of a digital music file does not necessarily do justice to their sense of devotion.”