How you know when your business has really been a flop? When, you drop it, and it’s only a week later that people realized that you’re no longer in it. That’s the case with Wal-Mart, which pulled out of online video sales on December 21st with a short note to its customers on the Wal-Mart Web site and absolutely no attention from the press.

Wal-Mart rules DVD sales. The brick-and-mortar retail giant won’t release its sales numbers, but most estimates have Wal-Mart selling the lion’s share—30 to 50%–of DVDs. Online was another story.

The company is blaming Hewlett-Packard for no longer supporting its video rental software. This is so silly it doesn’t need any comment.

I, a thumb-fingered amateur programmer whose last serious programming project was more than twenty years ago, could whip-up a video sales system from a LAMP (Linux, Apache, MySQL, PHP) stack in a week. Besides, let’s get real, if Wal-Mart wants software, do you really think HP will say ‘no?’ Come on. The real reason that Wal-Mart is backing out of online video sales is that it couldn’t make it work.

This is more than a little odd on the face of it. Why did Wal-Mart, which has an incredible internal IT system, fall flat on its face when it came to online video sales?

I think there are several reasons. One is that while Wal-Mart’s executives are the wizards of supply chain efficiency, they don’t get that online sales is retail’s future. Amazon.com’s CEO and founder Jeff Bezos may worry about Wal-Mart in the long run, but Wal-Mart’s no danger for Amazon today.

More to the point, Wal-Mart, along with its allies, the major movie studios, couldn’t sell online video to even its most loyal Wal-Mart customers. They thought they could. Wal-Mart’s prices were, of course, lower than anyone else’s in the market. The studios got what Apple wouldn’t give them: different prices for different shows and movies.

So, what went wrong? First, Wal-Mart’s downloads were burdened by DRM. Yes, Apple’s video has the same problem. But, you can play Apple’s FairPlay videos on multiple Macs and Windows-based PCs, as well as on the iPhone, Apple TV, and the most popular portable video and music device of all: the iPod.

Most of Wal-Mart’s movies and TV show episodes can be played on a single Windows-powered PC using Windows Media Player. That’s it.

Oh, yes, you can also run it on Windows PlaysForSure devices. Except, whoops, Microsoft abandoned PlaysForSure over a year ago. Microsoft has replaced it with Certified for Windows Vista. There are only one, well two, little problems with this.

First, they’re not the same thing. You won’t be able to play these videos on Certified for Windows Vista devices. Of course, there are no such devices. Second, while Microsoft does have its own portable video device, the Zune, but it can’t play either PlaysForSure or Certified for Windows Vista video.

What a deal.

This isn’t just problem for users stuck with Wal-Mart videos. It’s inherent with any DRMed video or audio. Apple’s system is the best of them, but Wal-Mart’s orphaned videos should remind us that any DRM is never to our benefit.