I don't consider this comparable to a netbook if I can't install the applications I want, only the ones Apple approves. Besides, $499 is WAY too much to pay for a netbook. That much will get me a 2.2GHz laptop with tons more screen, storage, and RAM:
http://www.newegg.com/Product/Prod [...] 6834220693
This is kind of misleading because it implied that all this playback is being done in software. There is almost certainly a dedicated H.264 chip in these things or a dedicated 264 block on the processor.