Trip Chowdhry's View On The Upcoming Apple TV, Netflix And FoundationDB

Analysts at Global Equities Research recently attended the NoSQL Conference. After the event, Trip Chowdhry shared – in an email sent to investors – a comprehensive view on Apple Inc. (NASDAQ: AAPL) and Netflix, Inc. (NASDAQ: NFLX. Below are some of his comments.

The Key Message

According to the firm, Apple has “definitely” purchased FoundationDB – the company responsible for the NoSQL database engine behind the next Apple TV platform, probably for less than $50 million.

“Apple TV Platform provides strong indication that Apple TV will come with its own SDK (Software Development Kit) and its own App Store; and hence its own Apple TV Ecosystem,” the expert added.

Related Link: Apple's TV Service Could Be "Netflix On Steroids"

Netflix, for its part, is facing considerable headline risk. In this new environment, Netflix is just one more App on the Apple TV Platform – somewhat of a second-class citizen, Chowdhry stated.

His take: shareholders may want to protect the downside risk to Netflix’s shares, on the announcement of the upcoming Apple TV.

Further Details

Before opting for acquiring FoundationDB for a one-time cost of approximately $50 million, Apple’s intention was to OEM MongoDB. However, the analyst noted, “the success penalty would have been huge, which could have impacted the margins (basically, if Apple TV becomes successful, Apple would have to pay more to MongoDB).”

Looking at FoundationDB through a C.A.P Theorem optic, Chowdhry noted that the company “is optimized for A (Availability) and P (Partition Tolerance) and not C (Concurrency). A system Optimized for A and P – is ideal for TV applications. The system is extremely fast […] highly optimized for customer profiles and recommendation engines. Hence, an A, P Optimized system is ideal for Apple TV. BTW, MongoDB is optimized for C (Concurrency) and P (Partition Tolerance) and hence not ideal for a TV Platform.”

The fact that Apple TV is optimized for A and P is what led Global Equities Research to infer that the platform service will have its own SDK and App Store, and, consequently, its own ecosystem.