Apple should buy Tivo redux
Apple should buy Tivo?NOW!
Tivo now has the ?beleaguered? title and the death knells are coming fast and furious. I have always admired Tivo rabid fans. They remind me much of my fellow Mac users. I think this is one of the reasons why I believe Apple should acquire Tivo. Sounds crazy but in reality it is not. Apple is quickly becoming a player in Audio and Video Production. They have the #1 legal download service and portable player. Purchasing Tivo allows them to fast track into the hot DVR (Digital Video Recorder) market. Here?s how.
Tivo
Tivo is a great system with the best User Interface hands down. They have a great name and 1.6 million rabid users. What?s the catch? They are small and the large cable operators are encroaching fast into their area. Tivo?s have weaknesses as well. They must sell their hardware at a loss to entice users. This means all of their profit comes from either selling a lifetime service to their guide data or paying a monthly fee of $12.95. This means that if you stop paying the monthly fee you have a useless paperweight. The lifetime service is the better deal but now that $299 Tivo is now $549
Apple to the rescue
How can Apple parlay an acquisition of Tivo into something profitable when Tivo is having problems profiting? By taking Tivo and building upon it. If Tivo wasn?t totally useless without the monthly or lifetime fees it wouldn?t have to sell at a loss to. This is the first thing Apple would fix. After the acquisition Apple would keep things similar for a year or so while they revamped the Tivo system. The UI would remain relatively the same but instead of using Linux to run the Tivo Apple would replace it with a new Quicktime capable of running Set Top Box (STB). This opens up a whole new world for Tivo. Now ?any? file that plays in Quicktime now plays on the Tivo. Just that easy the Tivo now supports iLife. Songs purchased from the iTunes Music Store now play along with your Garageband tunes. iPhoto files are supported and of course even your own iMovie creations. PC files would work of course because of Quicktime. So now we have rid the Tivo of its most glaring weakness, obsolescence. But how would Apple handle the subscriptions? . Mac
. Mac is Apple?s answer to dealing with the guide data. Currently Apple charges Mac customers $99 a year to subscribe. This gets them a mac.com email address, web space and other sync features. Apple would create .Mac for Tivo. This would give them the guide data and even some website space and if they are Mac users they would get the Mac specific features available to that platform. This would be $120 year or the Lifetime amount of $250 would still apply with no web space.
Future
Ok so now we know what Apple can do how will they make money? Well Apple will give Tivo the financial backing they need to withstand and persevere against the large cable operators rolling out substandard DVR for cheap. Apple would gain 1.6 million new .Mac users bringing the total to 2 million users. Apple now has inroads into broadcast recording. This is huge because now that the FCC has mandated that Cable Cards must be offered from the large cable operators the door has been opened for Tivo to get on more TV sets. Cable Cards are being built into TVs and STB so that an encrypted HDTV signal can be decoded ?without? the need for the cable operators own STB. What do you lose by not going with the operators STB? Not much really: you lose some of the video on demand features but I think many of us know that Apple will have a say in that someday as well as Netflix and Blockbuster. Cable Cards will allow the next Tivo to access all your favorite paid channels and record them in glorious HDTV. No more crazy hookups either.
This deal would simply make too much sense. Apple has the infrastructure setup to parlay this into something big. iPods and Tivo capable multimedia STB from Apple could be a huge hit.
Tivo now has the ?beleaguered? title and the death knells are coming fast and furious. I have always admired Tivo rabid fans. They remind me much of my fellow Mac users. I think this is one of the reasons why I believe Apple should acquire Tivo. Sounds crazy but in reality it is not. Apple is quickly becoming a player in Audio and Video Production. They have the #1 legal download service and portable player. Purchasing Tivo allows them to fast track into the hot DVR (Digital Video Recorder) market. Here?s how.
Tivo
Tivo is a great system with the best User Interface hands down. They have a great name and 1.6 million rabid users. What?s the catch? They are small and the large cable operators are encroaching fast into their area. Tivo?s have weaknesses as well. They must sell their hardware at a loss to entice users. This means all of their profit comes from either selling a lifetime service to their guide data or paying a monthly fee of $12.95. This means that if you stop paying the monthly fee you have a useless paperweight. The lifetime service is the better deal but now that $299 Tivo is now $549
Apple to the rescue
How can Apple parlay an acquisition of Tivo into something profitable when Tivo is having problems profiting? By taking Tivo and building upon it. If Tivo wasn?t totally useless without the monthly or lifetime fees it wouldn?t have to sell at a loss to. This is the first thing Apple would fix. After the acquisition Apple would keep things similar for a year or so while they revamped the Tivo system. The UI would remain relatively the same but instead of using Linux to run the Tivo Apple would replace it with a new Quicktime capable of running Set Top Box (STB). This opens up a whole new world for Tivo. Now ?any? file that plays in Quicktime now plays on the Tivo. Just that easy the Tivo now supports iLife. Songs purchased from the iTunes Music Store now play along with your Garageband tunes. iPhoto files are supported and of course even your own iMovie creations. PC files would work of course because of Quicktime. So now we have rid the Tivo of its most glaring weakness, obsolescence. But how would Apple handle the subscriptions? . Mac
. Mac is Apple?s answer to dealing with the guide data. Currently Apple charges Mac customers $99 a year to subscribe. This gets them a mac.com email address, web space and other sync features. Apple would create .Mac for Tivo. This would give them the guide data and even some website space and if they are Mac users they would get the Mac specific features available to that platform. This would be $120 year or the Lifetime amount of $250 would still apply with no web space.
Future
Ok so now we know what Apple can do how will they make money? Well Apple will give Tivo the financial backing they need to withstand and persevere against the large cable operators rolling out substandard DVR for cheap. Apple would gain 1.6 million new .Mac users bringing the total to 2 million users. Apple now has inroads into broadcast recording. This is huge because now that the FCC has mandated that Cable Cards must be offered from the large cable operators the door has been opened for Tivo to get on more TV sets. Cable Cards are being built into TVs and STB so that an encrypted HDTV signal can be decoded ?without? the need for the cable operators own STB. What do you lose by not going with the operators STB? Not much really: you lose some of the video on demand features but I think many of us know that Apple will have a say in that someday as well as Netflix and Blockbuster. Cable Cards will allow the next Tivo to access all your favorite paid channels and record them in glorious HDTV. No more crazy hookups either.
This deal would simply make too much sense. Apple has the infrastructure setup to parlay this into something big. iPods and Tivo capable multimedia STB from Apple could be a huge hit.
Comments
So it's time for Apple to step in. Steve Jobs is the only man in techland who can stand up to the content companies on his own terms. Not only does he understand the entertainment industry -- his other company, Pixar, is a Hollywood hit machine -- but he also deeply understands the consumer. Apple's "Rip. Mix. Burn." approach has captured the essence of how consumers feel about music: It's theirs.
Beyond that, Jobs used the iPod to help curb music piracy: The device is wedded to one computer at a time, making tune theft more trouble than it's worth.
TiVo should find a soft spot in Jobs's heart for other reasons. In January, TiVo announced that upcoming devices would use Apple's Rendezvous networking technology to allow TiVo-equipped TVs to play music and display photos stored on a Mac. Also, TiVo is similar to Jobs's erstwhile NeXT Software -- an expensive and risky endeavor, but eerily prescient. When Jobs returned to Apple, he brought NeXT with him, and its core technologies are burrowed deep into OS X, the elegant operating system at the center of Apple's new "iLife" media strategy.
Jobs could do the same with TiVo. With a depressed market cap and nearly 625,000 customers, TiVo is a steal. Jobs would have to unwind some messy licensing agreements, but he's done that before. His next step would be to apply Apple's design elegance and create an "iTV" device that integrates with Macintosh OS X, the Internet, and your cable or satellite box. Talk about a revolution. Once Apple turned on the marketing and PR offensive, we'd have one hell of a Hollywood drama unfolding. And with Jobs in the lead role, it'd be awfully fun to watch.
Yup it would be fun. Will Apple have the stones??
But why not make the whole model simpler...no monthly subscription cost?
Sell the boxes...$399 but no monthly subscription...but you need an Apple/TiVO box to use the on-line service portion.
The monthly subscription is the main thing holding me back from getting a TiVO.
There is something in economic theory about "commoditizing your complements".
This is what Apple is trying to do with iTunes and iTMS relative to iPod. This is what TiVO is trying to do with boxes relative to monthly subscriptions.
Apple could reverse this. Give away the subscription to sell the boxes.
Now I guess they should have banned me rather than just shut off posting priviledges, because kickaha and Amorph definitely aren't going to like being called to task when they thought they had it all ignored *cough* *cough* I mean under control. Just a couple o' tools.
Don't worry, as soon as my work resetting my posts is done I'll disappear forever.
Apple then takes the Tivo UI and makes iDVR. That way they have the STB arena covered and computer only market covered. I still think they should offer a premium subscription however with downloadable content and a triumphant return of Quicktime TV.
Give it a couple of years and we'll see the power of AVC and downloadable video content. In the meantime full support of iLife and Airport would make the new Tivo a joy to use as a playback device for multimedia.
There's no reason why a Tivo complement iTunes very well.
Originally posted by AirSluf
This won't happen unless Steve has a DRAMATICALLY MAJOR change of heart on the TV vs computer thing. He has ben very vehement for quite a years that you use computers to use your brain and TV to turn your brain off; therefore there is no realistic confluence between computers and Apple included TV functionality.
TiVo has quite a few warts on the business level, not the service provider level, which are holes they dug themselves. Those business issues are more of an impediment than the service marketing. Apple would almost be better off to take their new HD codecs and experience running the iTunes service to start from scratch and finish TiVo off, rather than try to keep TiVo alive. It could be the next killer application for the iMac, especially if it could be paired with an evolved AirPort Express for audio and video.
Steve needs to be out of this one. If the acquisition happened it should be the newly formed iPod division handling this and not SJ. Perhaps his cancer scare will have him thinking differently. The TV is just becoming a large monitor. HDTV is great for photos and many people have stereos connected. Apple can leverage this into more Airport Express sales. Apple is in danger of falling behind the curve. DVR software is available from plenty of PC companies. El Gato is all we have now. The problem with Apple "rolling their own" is that they don't have the brand recognition of Tivo nor do they have the built in installed base of 1.6 million users. If the iPod has a Halo Effect then imagine how many Tivo users would convert to Macs for great functionality.
We have to face the facts that Steve Jobs will be sitting across from the MPAA in meetings within 5 years to hammer out video on demand licensing of their content He will have much more sway if walks in with 2 million Tivo users and success from iTMS. Tivo's current problem is getting their product in homes where TW and Comcast are blowing DVRs out for cheap. The thing is they all have crappy UI. Apple's Tivo of the future could be the testbed for Quicktime in a CE environment.
Also put it this way. Apple paid $66 million for Powerschool and has done nothing but lose edu marketshare. Waste of freakin' money. Tivo's cap is only $300 million but the IP and inroads Apple could make would be worth much more. We all know Apple is going to need a home unit soon for iTMS track playback. Apple could build Tivo back into a billion dollar company. They have the retail stores and distribution to make it work. They have a CEO that the entertainment industry will listen to. They have every incentive to do so with far little risk.
If Apple can get people to pay $399 for an iPod they can get people to pay $500 for a homepod with full Tivo access.
Originally posted by AirSluf
This won't happen unless Steve has a DRAMATICALLY MAJOR change of heart on the TV vs computer thing. He has ben very vehement for quite a years that you use computers to use your brain and TV to turn your brain off; therefore there is no realistic confluence between computers and Apple included TV functionality.
Okay, when will this madness end?
Yes, Steve has said that there are differences in the way people relate to and use the two devices (TV and computer). But everyone assumes this was meant negatively rather than simply factually...or an observation. That is not my take at all. Everyone has turned this into "Steve hates TV." I don't know that that is the case at all. He is simply reflecting on how people use the devices. A great many people "turn their brain off" when they listen to music as well.
Originally posted by Chris Cuilla
Okay, when will this madness end?
Yes, Steve has said that there are differences in the way people relate to and use the two devices (TV and computer). But everyone assumes this was meant negatively rather than simply factually...or an observation. That is not my take at all. Everyone has turned this into "Steve hates TV." I don't know that that is the case at all. He is simply reflecting on how people use the devices. A great many people "turn their brain off" when they listen to music as well.
Some quotes from an interview:
Do you have any other thoughts about where your competitors are taking their strategies? For example, Windows Media PCs are computers attached to TV sets.
Well, we've always been very clear on that. We don't think that televisions and personal computers are going to merge. We think basically you watch television to turn your brain off, and you work on your computer when you want to turn your brain on.
Are there some complementary aspects to it?
Well, they want to link sometimes. Like, when you make a movie, you burn a DVD and you take it to your DVD player. Someday that could happen over AirPort, so you don't have to burn a DVD -- you can just watch it right off your computer on your television set. But most of these products that have said, "Let's combine the television and the computer!? have failed. All of them have failed.
So what he is saying is, that you shouldn't expect to see a product from Apple that allows you to use your TV as a computer, but a product that allows you to see your photos and movies on the TV is viable.
This interview is pre AirTunes, and I would expect to see an AirPort Express 2 with video capabilities.
PS: Since TiVO has problems it seems that Jobs has a point.
Originally posted by JLL
Some quotes from an interview:
So what he is saying is, that you shouldn't expect to see a product from Apple that allows you to use your TV as a computer, but a product that allows you to see your photos and movies on the TV is viable.
This interview is pre AirTunes, and I would expect to see an AirPort Express 2 with video capabilities.
PS: Since TiVO has problems it seems that Jobs has a point.
I haven't said that Steve is wrong...only that his comments have been interpreted as a) an indication that he "hates" TV, and b) that Apple would never produce a product related to TV. I think both are false assumptions. I think a correct assumption would be that Steve (and Apple) recognize the different ways the devices are used and that the idea of "TV on my computer" is a limited market...just as "computer on my TV" is. In other words...I think he's saying "A computer is a computer and a TV is a TV and merging them makes very little sense for MOST customers."
Like you...I can imagine an Airport Express with video streaming too. This could blow away TiVO.
Now I guess they should have banned me rather than just shut off posting priviledges, because kickaha and Amorph definitely aren't going to like being called to task when they thought they had it all ignored *cough* *cough* I mean under control. Just a couple o' tools.
Don't worry, as soon as my work resetting my posts is done I'll disappear forever.
If that's really his take on TVs or watching TV on the computer then he should just resign from Pixar because he doesn't have a clue of the future or why he's at Pixar.
Now I guess they should have banned me rather than just shut off posting priviledges, because kickaha and Amorph definitely aren't going to like being called to task when they thought they had it all ignored *cough* *cough* I mean under control. Just a couple o' tools.
Don't worry, as soon as my work resetting my posts is done I'll disappear forever.
Originally posted by Chris Cuilla
I haven't said that Steve is wrong...only that his comments have been interpreted as a) an indication that he "hates" TV
I was actually supporting your argument that he never said that
Originally posted by JLL
I was actually supporting your argument that he never said that
Sorry. I'm just used to everyone saying Steve hates TV...should have read your post more carefully.
Homegrown or a buyout of TiVo, either way Apple would have to do pretty much the same things. I don't know if just the 1.6 million DVR owners are enough difference for the $300 mil. I would be much happier to see a DVR addition to the iLife suite, a video APExpress and provide the program guide service (which is the heart of TiVo) as part of .Mac.
I have to disagree. I think for $300 million owning the Tivo name is far better than starting from scratch. It means paying for less marketing because Apple would receive much more press over taking over the "beleagured Tivo" versus coming out with a whole new product. Chances of success are increased when you hit the ground with a million plus users. Tivo is failing because without purchasing the lifetime guide data or monthly it's a anchor. Apple could create a DVR for iLife but that's a bunch of development costs that could be avoided buy purchasing Tivo and using their software.
Someone is going to purchase Tivo soon. Apple would be such a good fit I can't believe they have $5 billion in the bank and would pass on this. Sure they could roll their own but why duplicate? Apple is struggling trying to make dot mac usefull. 500 thousand customers is nothing and I keep hearing from current users that aren't going to renew.
My mother is a tech neophyte but she LOVES her Tivo. She will never give it up. She recognizes its well done UI and enjoys it. My next goal is to get her on Macintosh. Be nice if I could tell her Apple bought Tivo.
Man Apple just have everything needed to pull this off and get paid.
Rendezvous/Opentalk- Imagine easy networking and sharing of movies within a Home Network.
Airport - Apple has already done great things with AEX but adding this to Tivo is even better because AEX requires a computer to handle the processing. Tivo would do this on its own.
Quicktime - Not only are we talking about video and audio but let us not forget that we could access Midi files and even Karoake if you are so inclined.
I eventually see the ability to basically run OSX lite on a STB. Imagine the possibilities.
The year is 2008
I come home from a long grueling workday. I turn on my 61" LCD monitor and tune to the daily news. After the news I switch video inputs and look at my newest Tivo information. I have set up automated actions that has the Tivo pull my email messages from my Powermac in the office. I quickly read my email. I notice that my Aunt Peg has sent me a iChat file. I open it up and I'm now watching Aunt Peg speaking into her iSight..the motion is 30fps and smooth. I check to see if Aunt Peg is still online. She is; I contact her using iChat AV and enable my iSight. We chat for a bit and she sends me a few documents which iChat downloads quickly. We end the call.
I decide I'm in the mood for some background music. I queue up some playlists from iTunes and begin Random Play. The phone rings and iTunes automatically pauses(that features been in the iTunes API for a couple years now) I grab my wireless headset and take the call. The call ends and my iTunes immediatly springs back to life right from where it left off. I listen for about 15-20 minutes and then decide I want to look at some of the editing I recently finished in Final Cut Pro
I do a quick Spotlight search and find my latest file. A HD video of the families last vacation to the Grand Canyon. I've added titles and a backing track and even composited some elements in for show. I've encoded it to AVC and it streams easily to my LCD panel through the STB. I love the way my video encompasses various multimedia elements. I've got motion graphics, 3D, great sound and HD photos that are panned just like Ken Burns. It's really a slick presentation. I smile and stop the video. I'll tweak more later.
I'm ready to pick up my children but before I go I grab my wireless keyboard and call up my iCal Calendar to add some meetings and family functions. I notice that tomorrow I have a 40,000 checkup on the car...glad I checked because I had forgotten this. I shut down the LCD and Tivo, grab my keys and I'm out the door.
It may sound like science fiction but peoples lives today are busy. They need access to tools and Entertainment devices will start to meld with Productivity devices. Apple needs to parlay their iPod success into hit after hit. The Mac is not the savior here..the nice Apple technologies are.
If anyone could pull this off it's Apple. Here's hoping
Now I guess they should have banned me rather than just shut off posting priviledges, because kickaha and Amorph definitely aren't going to like being called to task when they thought they had it all ignored *cough* *cough* I mean under control. Just a couple o' tools.
Don't worry, as soon as my work resetting my posts is done I'll disappear forever.
Originally posted by AirSluf
Heck, other than the 61" LCD that is executable by WWDC next year if the will is there. The only thing we don't really agree on is importance of the TiVo name.
When your name become a verb you're doing well.
"Man you have to Tivo that show it's outrageous!"
Ask people what Tivo is and they know it has to do with Television. The fans are rabid, they will support Tivo to the end. Apple's moxy and chutzpah cold revitalize this company just like Microsoft's "150 million" investment in Apple "revitalized" the Mac. If Apple buys Tivo and and then makes a few simple announcements.
1. "Tivo's will eventually play iTMS tracks"
2. Tivo monthly subscriptions are now $5 for each unit and unlimited.
3. Tivo will be in every Apple store being demoed and we will increase the brand stateside and abroad as time goes on.
Tivo becomes a 1 billion dollar subsidiary to Apple within 2 years. Apple is magic in consumer electronics right now. It's time to capitalize on that. Apple's buying power is so much better than a company with a 322 million market cap.
In January, TiVo bought van Hoff's tiny startup, Strangeberry, for an undisclosed sum. Hardly anyone noticed. But for TiVo, the deal is shaping up as a masterstroke. Van Hoff is known in elite computing circles as one of Silicon Valley's most brilliant minds. Prickly? A bit. Nerdy? You bet. But, among other career highlights, van Hoff was one of the chief developers of Sun Microsystems's (SUNW) Java programming language, now seen as being among software's most momentous technical feats. Even Sun co-founder and industry legend Bill Joy calls van Hoff "a great programmer." Marimba founder Kim Polese, who worked with van Hoff at both Sun and Marimba, calls him a "giant in the software world."
More to the point for TiVo, van Hoff is an absolute nut for its technology. He owns five TiVo boxes. At Strangeberry, he and a fractious posse of coders put their minds to building the elusive dream machine that TiVo and every other convergence player has long sought: the single, elegant, indispensable device that will control all the elements of home entertainment, from computing to music to movies.
A number of analysts and other third-party observers who've seen the fruits of van Hoff's labors believe that his team may well have succeeded. Strangeberry software gives users the power to do things that no other set-top box or PC has been able to do. You can stream any content from the Net, watch it on your TV, or route it wirelessly to any other device -- MP3 player, PDA, laptop. It can all be done with the ease that TiVo's 1.6 million subscribers already have come to relish: You'll never need to click more than a button or two on a single remote to pull entertainment into any room in your house. "Nobody else has technology that comes close," says Daniel Ernst, managing director of New York investment bank Rodman & Renshaw.
And perhaps most significant, TiVo has a fortress of intellectual property protecting the new technology, meaning that rivals will find it more difficult to quickly ape TiVo this time. That could give it enough breathing room to execute a dramatic and difficult shift in its business model. TiVo expects snazzy new features enabled by the Strangeberry software to goose sales of its own boxes. But it wants to pull back from the brutal, margin-sapping hardware game.Instead, it envisions licensing van Hoff's software to some of the very cable companies and other box makers that have been pounding TiVo into the dust, making Strangeberry the software standard for the convergence revolution and guaranteeing it a defensible -- and lucrative -- position in the battle for the living room.
Is TiVo dreaming? The new approach clearly remains something of a Hail Mary pass. TiVo's rivals, ranging from Microsoft (MSFT) to Time Warner (TWX) (the parent of this magazine) to satellite-TV operators to consumer electronics makers, all have similar projects in the works and vast resources to develop them. TiVo recently took another body blow when DirecTV, which offers TiVo as part of its satellite service and is a big contributor to the company's revenue, announced that it will also begin offering a rival's DVR technology.
Still, for the first time in many moons, there's a quickening of TiVo's pulse. Its revenue rose almost 50 percent to $141.1 million in the fiscal year that ended in January. Its net loss of $32 million was painful, but less than half of last year's figure. Mike Ramsay, the company's CEO, says subscribers will double to more than 3 million early next year and hit 10 million by 2007. Analysts predict that the company will turn profitable by the end of next year. "TiVo is executing brilliantly," Ernst says. "There's a strong case that this company is going to survive."
It's largely van Hoff's technology that will prove that case, one way or the other. Last year, in a burst of enthusiasm not uncharacteristic for TiVo fans, Federal Communications Commission chairman Michael Powell called its device "God's machine." Van Hoff's work, more than anyone's, will determine whether TiVo meets its maker anytime soon.
"You're calling me lucky?" snaps van Hoff from across a table in a crowded Silicon Valley cafe. Van Hoff, 6-foot-4 and built like a bull, doesn't like being asked how he, of all the world's coders, wound up a key team member during the early days of Java at Sun. "It's all skill," he says, his gaze steady behind round metal frames. The 41-year-old programmer won't hear anything about serendipity, alignment of stars, or pure luck.
Sun scientist and Java inventor James Gosling heard about van Hoff through colleagues in 1993, while the Dutchman was still earning his master's degree at Scotland's prestigious Strathclyde University. The son of an entrepreneur, van Hoff started coding with punch cards in high school during the 1970s. By college, he already had a reputation for creating from "whole cloth," meaning he'd take a project from idea to architecture to execution, a rare talent for a programmer. He is also fast, known for humbling even veteran engineers by boiling down 15 pages of their hard work to three clean lines of code. Gosling persuaded him to work on the then-nascent Java project.
Van Hoff's talent, coupled with an entrepreneurial ambition, helped him build a tight-knit crew, each member hoping to get in on the interesting projects that always seem to bubble up around van Hoff. "Arthur is somebody who makes things happen," says Jonathan Payne, a Java veteran who, along with Adam Doppelt, has worked with van Hoff for more than six years. Though close, the three will scrap. "They're like old married couples," says Thomas Banahan, a former colleague of van Hoff's who is now global head of Lehman Bros. Venture Capital Group. "They all challenge each other, get grumpy, and go back to their corners." Not always. Pavni Diwanji, now chairman of spam fighter MailFrontier and a former Java team member, recalls a few fistfights during the all-nighters at Java central. "For Arthur, everything had to be perfect," she says. "There were no compromises with him." Still, when van Hoff left Sun in 1996 to help found Marimba, his team went with him.
That startup was one of the most hyped ventures of the pre-dotcom era. But van Hoff grew bored as an executive at the new company, which tried to develop ill-fated "push" technology to move Internet content to desktop computers. He preferred to code, rather than collate reports. "I'm not a manager," he admits. "I'm not interested in running companies. I'm much more interested in technology."
In 2002, van Hoff quit Marimba. Doppelt and Payne joined him in a new startup they called Strangeberry, a name the team came up with after a late night of random word association. Van Hoff didn't know what Strangeberry was going to do, but he started with two rules: Don't build anything like what Marimba was making. And have fun. (Van Hoff does have a lighter side; one of his hobbies is programming Lego robots to ride around on two wheels like a Segway.)
First the Strangeberry team built a jukebox programmed to run their music. But a lot of things the trio thought would be fun turned out to be "mind-numbingly dull," Doppelt says. Eventually they turned to brainstorming about the future of home networking, digital media, and home video, and how it would all converge in a house. Van Hoff was already a TiVo junkie, but he was also thinking way beyond the DVR. "We tried to imagine 10 years from now," van Hoff recalls. "What is going to be connecting the back of your TV?" Coaxial cable? Ethernet? Wireless? Ultra-wideband? The answer, he thinks, is irrelevant. "You won't be recording shows anymore," he says. "You'll just be viewing them. Why record them when you can just play them directly from the Internet?"
Van Hoff's crew built some basic DVRs and started experimenting. They dabbled with an intuitive interface that guided kids through the TiVo screen, and pitched it to the company, but TiVo wasn't interested. In July 2002, Payne bought a $300 AudioTron, a piece of hi-fi gear that transmits music files from a computer to a stereo; he'd ripped all his CDs but still wanted to listen to them on his stereo. Payne says his colleagues "all made fun of me" for paying so much instead of building something himself. But it set Doppelt thinking, and within days he pitched the "videotron." As he put it at the time, "Marry the power of the PC and the elegance of consumer electronics, and you have a killer product."
This was not a particularly startling revelation; people started working on the PC-TV meld many years ago. What was different was that van Hoff and his team had the coding chops to come up with a new software-based approach to convergence's central problem of getting various devices and forms of content to work easily together. The group dived into the project -- and nearly blew apart. "There were some knock-down, drag-out fights" over technical directions and how to steer the business, Doppelt says. He considered quitting many times, but despite "butting heads" with van Hoff, he stayed. All the squabbling, Doppelt says, was ultimately good for the team: "Out of this crucible, you get something beautiful. If everyone is willing to get along, you get mediocrity."
Remarkably, the team had a prototype up and running within two weeks. By fall of 2002, they were showing VCs a box that could transport content to a TV screen from virtually anywhere. The VCs had two reactions, Doppelt recalls. The first was "We've never seen anything like this." The second was "How the hell is a software company going to make money in the consumer electronics business?" The VCs politely passed.
Six months later, van Hoff wangled a meeting with more VCs, this time at Redpoint Ventures. Ramsay, TiVo's CEO and an engineer himself, dropped in as a casual observer; Redpoint was one of his investors. He was floored. "We had a meeting of the minds," Ramsay recalls. The acquisition came together within six months. If it ever troubled van Hoff that TiVo was bleeding, he isn't saying. "We really liked TiVo," he says. "Great product. Good karma. Great engineers."
So how does Strangeberry give TiVo a fighting chance? For starters, van Hoff and his team joined up and brought their coding wizardry. Far more important, of course, is the Strangeberry software and what it promises for TiVo.
Right now TiVo machines can do their recording and time-shifting magic only on programs piped in from standard cable or satellite feeds. That has made it easy for cable and satellite operators to attack by, for instance, offering cut-rate digital video recording as a way to hold on to new customers. Time Warner Cable sells DVR service for $3 to $4 a month less than TiVo's $12.95 offering -- and you don't have to buy the TiVo box, which runs about $150. Meanwhile, Microsoft and partners Gateway (GTW) and Hewlett-Packard (HPQ) are blazing away from a different angle, trying to make the PC, not the television, the living room's hub. Add in the fact that some in the entertainment industry see TiVo as a tool for the potential Napsterization of film and it's easy to see why so many people have blown taps for TiVo.
The copyright issues will take years to sort out, but for the more immediate competitive pressures, Strangeberry provides several defenses. First, van Hoff and his coders are expected to quickly create new features for upcoming TiVo boxes that should help the company pump up subscriber revenue. Already, the Series2 TiVo enables users to move music and photos from computer to TV. And it doesn't hurt that more and more consumers want a DVR: The overall market is expected to hit 25 million units in 2008, up from 4.3 million this year.
The bigger payoff, as TiVo sees it, will come from far more elaborate things that van Hoff's software will enable. One of Strangeberry's distinguishing bits of technical hocus-pocus is that it can recognize any digital content format -- MP3, HTML, DivX, and the like -- and massage it into the familiar and friendly TiVo interface. That enables Strangeberry boxes to quickly and easily draw in anything on the Web and move it to the TV, which consumers generally prefer to the PC as a comfortable place to get their entertainment, especially video. The content then becomes subject to all the tricks -- freeze-frame, ad zapping -- that TiVo is already known for. When fully loaded TiVo boxes hit the market next year, they will add new layers of interactivity and potential customization.
Doppelt cites this example: Fox Entertainment could green-light an American Idol app that would allow viewers to vote with a click of the TV remote rather than by phone. Fans could zip back and review clips of the performers while making their decisions. Another possibility: TiVo users could swiftly tap into Netflix's vast catalog of films and enjoy them on-demand rather than waiting for them to arrive in the mail. (Netflix has said it will put its catalog online next year, and TiVo CEO Ramsay is a Netflix director.) Or ESPN could use Strangeberry technology to create customized channels -- say, an A-Rod network that would send daily clips on the MVP shortstop's doings to a system's hard drive. "Strangeberry works and it's totally cool," says Marc Canter, co-founder of Web media tool maker Macromedia, who was given an early view of the technology.
None of TiVo's current competitors can do all the things Strangeberry makes possible. DVR devices built by Scientific-Atlanta (SFA), which makes set-top boxes for Comcast (CMCSK), Time Warner, and other cable companies, have recording capability but no Internet connectivity (see "The 800-Lb. Copycat"). Microsoft has stumbled repeatedly with its MSN TV service; these days it's more focused on its Media Center software, which uses a computer screen, not a television.
Selling more of its own boxes won't save TiVo, and TiVo knows it. Its real bet is that the Strangeberry software's power and appeal will drive licensing revenue skyward. And the targets of TiVo's gamble are some of its biggest tormentors. Cable and satellite operators have spent millions vainly trying to create something that does what Strangeberry does; TiVo hopes to persuade them that it's cheaper and easier to simply license van Hoff's software. Ramsay says he's been talking to all the big cable and satellite operators; no luck so far. But David Miller, an analyst at research firm Sanders Morris Harris, says that is nonetheless TiVo's road to salvation. "I think TiVo will survive, but as a provider of technology to cable companies" and not a hardware maker or service provider. "The right question to ask," he says, "is whether they can make big money off licensing deals."
Another intriguing strategic twist involves the company's plans for ads. The feature that gave TiVo instant buzz when it debuted was its ability to skip commercials; many advertisers have loathed it ever since. But TiVo's technology collects reams of data on viewing habits, and its user base is heavily skewed toward the 18- to 34-year-olds whom marketers lust after. Ramsay believes Strangeberry software could create highly interactive ads. It will take time to get advertisers' trust, he concedes. But he says that within three years, basic digital recording, which today provides about 90 percent of TiVo's revenue, will drop to about a third. The rest will come mostly from software licensing and ads.
In the end, TiVo still could simply be overwhelmed by the pressures it faces -- even if the Strangeberry software itself is a hit. Many observers think a likely outcome is that rather than partnering with rivals, TiVo will be swallowed by one, as happened to Netscape and many other tech pioneers that couldn't parlay their breakthroughs into lasting independent businesses. Van Hoff insists that this won't happen. "I'm at the center of a revolution," he says. If he succeeds, he'll probably lose the first part of the usual obscure-but-revered tag that people use to describe him. And he'll force a lot of hasty rewriting over on the obit desk.
The Strangeberry software will not be licensed by the cable operators until they are pressured. They don't know "cool" they know profits. Tivo has to create the "proof of concept" with Strangeberry software and when they have a buzz then they can start to license. Apple would be even better as Steve Jobs carries far more weight than Ramsey. Jobs is a Hollywood Fellow..he runs Pixar and is insider moreso than any CE CEO. Tivo has the talent but they just don't have the confidence. Apple brings that confidence and can secure nice IP from Stangeberry that can e licensed and utilized to extend Apple's platforms.
Originally posted by kim kap sol
But TiVo is much more interactive than normal TV. Even Steve can realize that TV can be so much more than just sitting on the couch and switching your brain to 'off'.
If that's really his take on TVs or watching TV on the computer then he should just resign from Pixar because he doesn't have a clue of the future or why he's at Pixar.
You are missing the point.
Watching TV/Movies is a passive experience. You sit down and watch what someone else has decided to make. You dont have to make any decisions, it isnt interactive.
This means that the ergonomics of the experience can suit that model of engagement. You can sit back in you sofa with a beer.
Computers are interactive. When you use a computer you are making decisions constantly.
This dictates certain ergonomics of operation as well. You tend to be close to the screen so that you can see it clearly, and have an upright seating position.
It certainly isnt impossible to watch TV on a computer. But the ergonomics of the computer arent really suitable to relaxing and taking part in the passive world that is TV. Computers arent set up to be relaxing, TVs are.
What this boils down to is that you shouldnt watch TV on your computer and you shouldnt use your computer on a TV. There are certainly exceptions:
You might only have a computer.
You might not have enough space for both.
So there is a limited market for computers that can watch TV. There are also people that will fall into this realm, e.g.: previewing your own movies.
Why doesnt this apply to music?
Because you can choose to relax while listening to music, and do nothing else. But you can also enjoy music while being actively engaged in something. Im listening to music right now.
What does this all lead to?
The computer needs to be able to project its presence to the TV. The recording/storage device will be a computer. For many people it already is, in the form of DVRs. But you dont want to operate you TV from your computer ( ala airport express ). So there needs to be some sort of remote and a really nice interface on the TV. Tivo does this. But I think Apple have tipped their hand with the Airport Express. The Mac will use a small remote device to push data to the TV. The real issue is how to control it. Is a tablet going to be to complex? Can a remote do everything it needs to?
Originally posted by mmmpie
You are missing the point.
Watching TV/Movies is a passive experience. You sit down and watch what someone else has decided to make. You dont have to make any decisions, it isnt interactive.
This means that the ergonomics of the experience can suit that model of engagement. You can sit back in you sofa with a beer.
Computers are interactive. When you use a computer you are making decisions constantly.
This dictates certain ergonomics of operation as well. You tend to be close to the screen so that you can see it clearly, and have an upright seating position.
It certainly isnt impossible to watch TV on a computer. But the ergonomics of the computer arent really suitable to relaxing and taking part in the passive world that is TV. Computers arent set up to be relaxing, TVs are.
What this boils down to is that you shouldnt watch TV on your computer and you shouldnt use your computer on a TV. There are certainly exceptions:
You might only have a computer.
You might not have enough space for both.
So there is a limited market for computers that can watch TV. There are also people that will fall into this realm, e.g.: previewing your own movies.
Why doesnt this apply to music?
Because you can choose to relax while listening to music, and do nothing else. But you can also enjoy music while being actively engaged in something. Im listening to music right now.
You say all this as though they are facts...they're not. TV could become an interactive experience like I said earlier...it doesn't need to remain a passive experience. And a recent survey shows that a shitload of people watch TV while they're using the computer. So bringing TV *TO* the computer is *NOT* the limited market you make it out to be.
As computer monitors get bigger, I see less and less reasons why TVs and computers should be separate products. Your lack of foresight, mmmpie, makes it clear that there are people like you out there stunting technology expansion/growth.