By now, you’ve probably heard that Netflix has split into two separate businesses. Netflix will remain the streaming movie business and “Qwikster – the pot smoking elmo” will be the DVD-by mail business.

Online streaming is the growth business, it’s the future. The DVD-by-mail is the legacy business and Netflix’s core strenght. It is the business that built Netflix, however with the move to the cloud, on-demand instant access, any where any time, the DVD business is dying.

Netflix’s CEO, Reed Hastings, admitted that he “messed up” and became the victim of “arrogance”. I guess Hastings humbled up after the 30% drop in shares of Netflix in a single day.

What does this mean for Netflix customers? If you have a streaming and a DVD plan you will have two Netflix accounts. The streaming account called “Netflix” and DVD-by-mail called “Qwikster”. You will get you separate billings. Each will have its own library. Eventually all of this will tire consumers and they will move to services that will be easier to use.

What would those services be? In a word: Apple. I believe Apple’s iMovies/Apple TV, when it launches, will kill Netflix. Apple’s will be a streaming only service just like Netflix. Apple has more negotiating power than Netflix with the movie industry and Apple has more distribution channels than Netflix. Apple has the money to outbid Netflix for movie catalogues and will end up having a better selection than Netflix. Due to its distribution power, Apple can/will offer a better services for probably the same price as Netflix. All these advantages benefit the consumer, the movie industry and as a result Apple will win.

By splitting its existing business, Netflix is trying to avoid the fate of AOL, Borders (which closed the last of its bookstores over the weekend), among many others. However, it is already the next Betamax.

To understand the rise of Apple and how its changing the entire software and technology business, read iPad A Game Changer.