I just can't believe Apple when their reason for blocking a competitor (to the App Store) is open standards especially with how they're implementing these "open standards".
HTML5 is still in it's infancy, if you can even call it that being that it's still a draft, and the term is usually used in context to online video.
Safari doesn't natively support the OGG theora codec. It's arguably inferior performance wise, but arguably superior in the long term due to being a free and open codec. This is necessary if we want to protect the internet as we know it. We shouldn't have to worry about licensing when it comes to adding our <video> elements on our website.
There is no good reason in not supporting OGG Theora. A browser is capable of supporting both (as Chrome does) and it's free to implement. Apple, unfortunately, has its paws in the H.264 mixing pot with the Mp4 container being derived from the Quicktime container. I can only conclude they're trying to leverage their market share and force out the only truly open solution for the video element of the future as it gives them some sort of control over the web. Google is close to open sourcing their V8 codec which is said to surpass H.264 and will be without any of the licensing restrictions that make H.264 a dangerous choice for the web and we'll then be able to truly see what Apple's intentions are. Do they support the superior yet open codec or their proprietary one?
Flash, aside from the player, is open source. Anyone can publish content in the swf format. It's superior to the Canvas and svg elements currently and it's used on some 90% of websites. It's the defacto standard for video and animation and I pay nothing to put it on the web. With the amount of effort Adobe has put in to getting flash on the iPhone I don't think they couldn't come up with something that was easier on the battery and was acceptable performance wise.
It comes down to the fact that Apple is trying to assert control over the web using proprietary codecs and is trying to fend of competitors to its walled garden by blocking flash. They have no interest in what's best for the general consumer... they're just interested in their bottom line.
I am excited about the future of video on the internet and the quicker the video element becomes a unified standard the better. But Apple is doing it wrong and I'd stick with years of flash before I bow to how they want the internet to be.