Tivo at crossroads, needs cable partner says analysts

This interesting syndicated article on Forbes "Tivo at crossroads, needs cable partner-analysts" comes right before TiVo's third quarter earnings report, which is set to be released tomorrow. My favorite quote from the article:

The danger, Forrester Research analyst Josh Bernoff says, is that Tivo could end up like Apple Computer Inc. -- a highly profitable company with a fervent crop of users but whose market share lags far behind others in its market.

It's exactly the same point I outlined in August of this year: TiVo's Apple Problem. The problem for TiVo is that they probably do (and should) ask for a pretty stiff licensing fee in exchange for their software and brand, while cable companies would rather cut costs and write their own DVR software or purchase off-the-shelf generic units.

Comments

[MegaZone]

With the standardization of digital cable this is less of an issue - anyone will be able to product 'Digital Cable Ready' units. Just like today's TiVo can use analog cable, you'll be able to use a DCR TiVo without the cable STB.

Cox, Comcast, and Time Warner cable have all committed to start rolling out the new standard before the end of 2003. Panasonic announced 6 widescreen DCR TVs for this fall. Zenith has also announced new DCR TVs. Other manufacturers and cable companies backed the spec, so they'll be doing it too - those are just the plans I've read about specifically.

[David Plummer]

The TiVo to Apple comparison makes sense to me, both were the pioneers (don't think it is a coincidence that Windows looks more and more like the Mac operating system)

But TiVo has one million users and is going strong as the industry leader. When people use your company's name as the word for the product (I tivoed this), like Kleenex and Xerox, you are obviously the industry leader.

[Matt Haughey]

Actually David, I posted a Red Herring article (with helpful graphic) from a couple months ago that shows TiVo already has dropped to #2 in marketshare and all reports are that it is continuing to drop, hence my comparisons to Apple's early 1980's history of tanking in home computer marketshare.

[pb]

I don't thinkg the Apple comparison works. Computers are substantially more complex and multi-purpose. A relatively simple. single-purpose device like Tivo is ripe for packaging into your set-top box. And even though the copies will have inferior interfaces and usability, they will be acceptable to most.

[adampsyche]

It's just so much more fun to say that you tivo'd a show than dvr'd. I find myself using that word when referring to the Dish Network 510 that I got a few weeks ago.

[David Plummer]

I guess I am just someone who appreciates the quality and reliability of a brand.

As it happens I am also a Mac user. I know the TiVo has a better interface, and offers the more quality product.

Plus a lot of the cable company DVRs don't offer all teh features of a tivo I believe

[Nick]

Yeah, it's really too bad. I've had to valuate and analyze Tivo a couple of times. As an analyst and Tivo lover it was very difficult to maintain my objectivity. Tivo does have DirecTV but it'll need more to solidify a future. I think I read that someone recommended a stiff licensing fee. Yes and no. Tivo needs Comcast or some other 800-lb gorilla media provider with an existing customer base.

The problem is that no matter how tech-advanced Tivo gets, it doesn't matter because it's easy to duplicate and, in most cases, cheaper, for a media provider to mandate that their customers use whatever generic unit they decide. Tivo isn't negotiating from a strong position and so cannot demand a stiff licensing fee. The only value from a business standpoint that Tivo brings is brand equity.

This is the gray area. Just how much Tivo brings is what it has in its corner. I REALLY hope Tivo pulls something good off. I love Tivo.