Roku just pulled off the switch. In their first earnings statement since the company went public, the company announced blockbuster growth.

The CEO (pictured above ;-p ) has transformed the company from a product company that sold a streaming stick to a services company the provides an operating system for televisions. 

There are a great many companies who have attempted such a thing. Some--like IBM--have done so successfully. For others--like Microsoft--the verdict is less clear. But for Roku, their move has accomplished a few things: 

1. They are getting out of the business of retro-fitting older TVs for streaming with their hardware and instead are providing an operating system for newer TVs with their software. Software--especially through licensing and OEM agreements--scales more easily and is more profitable than hardware. 

2. The are moving out of a business orientated toward a single sale to one where they can generate highly frequency sales of content through their platform. 

3. Their unique positioning as the only streaming platform that doesn't also own/sell content directly has placed them as the platform with whom all content and TV makers can get along. For instance, Amazon sells streaming sticks AND content. They only allow integration of Amazon content with two platforms--Amazon Fire and Roku (I say this as very bummed Prime subscriber with a Chromecast stick). 

If Roku keeps up this momentum, they may well create a network effect akin to Microsoft Windows in the mid-90s. The more TV manufacturers they get OEM agreements with, the more content providers will integrate with Roku. The more content providers that integrate with Roku, the more TV manufacturers that will sign OEM agreements. Very shrewd and well-executed on their part.