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Just when it's on the verge of creating the Perfect Machine -- streaming TV, music, movies and the Web through one stylish box -- TiVo is facing doom. Unless a certain company decides to think different.
Mar 11, 2005 | They say necessity is the mother of all invention, but when it comes to household gadgets, the best devices are most often inspired by sloth, greed and self-indulgence. Anyone who's fallen in love with TiVo knows this well. The best thing to happen to TV since Larry David, TiVo is hardly a necessity. The device, which hoards and serves up weeks of your favorite shows on demand, is the product of an epicurean age, a media hedonist's best friend. If you want to start your day with last night's "The Surreal Life" and end it with three episodes of "The Ashlee Simpson Show," your TiVo will acquiesce to your (bizarre) wishes without even snickering. There is probably nothing or nobody else on the planet, not even your spouse or your personal assistant, so completely committed to pleasing you.
The tragedy is, while we indulge, TiVo suffers. While we frolic in the made-for-me land of TiVo, back in Alviso, Calif., TiVo Inc., the company from whose loins this remarkable machine came forth, is quietly sliding toward its end. It doesn't seem fair: How can a company that's been so good to us have done so badly for itself?
The numbers are plain. The market for digital video recorders like TiVo will grow substantially during the next decade, but the company faces stiff competition from cable and satellite firms (which are handing out generic, bottom-of-the-barrel TiVo-like machines to their customers), as well as from computer companies like Microsoft, which are investing huge sums in PCs that mimic the functions of TiVo.
In the past few months, TiVo has dismissed its CEO and lost a president, seen a critical deal to provide its technology to Comcast's cable customers fall apart, and burned through tens of million in cash, leaving its stock price at near an all-time low. (On Thursday, the company reported that it lost almost $34 million during its fourth financial quarter.) When you ask business analysts who study the firm about its future, you hear two refrains. One: TiVo's a fine company with an extraordinary product. Two: Stick a fork in it, TiVo's done.
There's no reason to doubt the dire prediction. TiVo's demise, which has been foreseen for at least a couple of years, will surprise nobody; technological trailblazers often bite the dust. What's interesting, though, is that in its death throes, TiVo is embarking on a new effort that could well revolutionize the way we experience media around us.
What's behind the brilliant new strategy? The company is again embracing our self-indulgence, greed and laziness by working toward a device that I like to call the Perfect Machine: a cheap, small, quiet, stylish thing that sits in your living room and can display all of your entertainment, from TV shows to music to movies to photos; it also hooks into the Web and gives you access to all manner of audio and video available online. The new project -- which TiVo calls "Tahiti" -- essentially aims to create a souped-up super-TiVo, a box so inviting, so enthralling, you'll never leave the couch.
The trouble is, the company's efforts may come too late to save it. Many of TiVo's rivals are also looking to build similar Perfect Machines; and without comparable engineering and marketing resources, the company's new initiative, however innovative, faces an uphill battle. What TiVo needs, says Josh Bernoff, an analyst at Forrester Research who follows the company closely, is a huge ecosystem of users and software developers willing to take a chance on its new features. But that won't happen if TiVo looks like it's on the rocks. There's only one man who can save TiVo now, Bernoff and others say: Apple Computer CEO Steve Jobs.
Bernoff's call for Apple to buy TiVo is at once crazy and inspired, and for several weeks now, TiVo-watchers online and on Wall Street have been debating its merits and adjusting their bets on its likelihood. In an open letter to Jobs, Bernoff notes that the success of the iPod has transformed Apple from a computer maker into a consumer electronics firm. But the real money in consumer electronics is in TV, not music, Bernoff says. At about $350 million, TiVo would be a cheap purchase for Apple. And if Apple pumped some resources into marketing and developing the product, it could turn TiVo into the iPod for TV. "TiVo-branded Apple products could generate hundreds of millions in revenue in the next few years," Bernoff writes.
The alliance could also make for some great technology. At the moment, no company, not even TiVo, has quite perfected the Perfect Machine. Many firms are trying hard, and have achieved only satisfactory results. Microsoft's 2-year-old Windows XP Media Center Edition, a specialized version of its operating system that can connect to a TV and record television shows and serve up music and photos through a remote control, has attracted a small but growing following, and the company is devoting significant resources to the product. A host of small tech companies are also releasing innovative media-center machines designed to make it easy to manage all your media from your TV, and there are thrilling efforts by hackers and hobbyists working to turn Linux and Mac computers into media centers. Even me.
The thing people call a "media center" seems to be in just the same place that MP3 players were about three and a half years ago, just before Apple released the iPod. Nobody quite knows what they should look like, or how they should function, or what features they need to have. But it's hard to see how Apple and TiVo could go wrong if they joined forces. As Bernoff writes in his memo to Jobs, "Think different. Buy TiVo."
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