Beta vs. VHS: The worse technology won because of a stronger business model.  Will the same thing happen to Native Apps that happened to BetaMax?

Do you remember when you had a choice between VHS and Betamax (Beta)? If you do, you're at least a Generation X'er (and maybe older, sorry). VHS won the war; a bigger, more cumbersome tape format beat out the (arguably) superior, more svelte Beta tape. The defeat of Sony's Beta format is legendary and has become a marketing study, but we could be seeing the same kind of thing (but different) with web apps vs. native apps on handheld devices.

Michael Mace has published an article on his blog, Mobile Opportunity, which reads like an obituary for native mobile apps -- all very interesting in light of the much-anticipated and heralded release of an iPhone SDK and 3rd party apps.

At issue is that due to rising costs and diminishing returns, software developers are fleeing the good ship "Native Apps" like it was the Titanic. The relatively "worse" technology is using the Web to deliver apps (VHS) has a better business model, the relatively "better" tech is writing Native apps (Beta), but Mace argues that the business model is basically dead.

If Mace is right, what does the future hold for native apps on the iPhone?