Apple + TiVo = Bad Idea
It’s pretty common knowledge that I love Salon.com. I recommend it to everybody. It’s really hard to beat them for news since they aren’t owned by a major conglomerate. That said, one of their writers, Farhad Manjoo, never ceases to disappoint and/or annoy. There have been quite a few times that I’ve read his articles and clicked away with the thought that there must be a serious crack addiction lurking behind those pieces.
Take his cover story for today, Save TiVo!, where he expounds upon the open letter Josh Bernoff of Forrester Research wrote to Steve Jobs courtesy of CNET. A lot of you already know of my bias against TiVo given my former employer, but putting that aside, I’ve gotta say that I think this is a bad idea.
Maybe I should clarify; this is a bad idea for Apple (and since that’s the company I’m concerned about, that’s why I say it’s a bad idea). I do not debate for a second that this would be a great solution for TiVo - but being bought out by anybody would be an improvement after blowing through cash and having a lackluster stock price. Apple would without a doubt improve and build upon the TiVo foundation.
But what does TiVo bring to the table? Honestly. Customer-base and patents. That’s it. While I don’t know what patents are in question here (nor do I know whether they’re worth any purchase price), the value of the customer base is highly questionable. If the iPod’s success in being the “gateway drug” in switching Windows-using iPod owners to the Macintosh is unproven and still debatable, how could an Apple-ized TiVo improve upon that? A DVR is about as far-removed (if not further) from the home computer as the iPod is. Nevermind the fact that there’s some (significant, I would imagine) percentage of their customer base that already uses Macs.
Looking at the technology side of the argument, it’s not necessarily a big secret that TiVo runs on Linux. Why would Apple want to add another OS to their stable? They’ve already shown (and said!) that they want to focus their energies on one consumer OS and one enterprise OS. True, they outsourced the iPod OS, but that wouldn’t be the case if they bought TiVo. And forget porting it to OS X - to make an operating system embedded (like the embedded Linux amalgamation powering all those TiVo boxes out there) requires a ridiculous amount of specialized work to eliminate the latencies you expect your consumer electronics product NOT to have (and yet are annoyingly persistent in a personal computer OS). Unless Apple has already been working on “OS X Embedded” (Why would they? For what kind of product would they do this?) in which case porting TiVo functionality would be some less effort, the amount of work would be overwhelming.
What would make more sense? If Apple wanted to jump into the grotesque shark-infested Hollywood IP waters in which DVR manufacturers are forced to tread, buying El Gato Systems would be a much better idea. El Gato makes DVR software for Mac OS X. A lot lower price tag, a lot less work and an easier platform from which to start a Mac Mini Media Center. Knowing Apple’s recent track record, chances are they would outdo TiVo enough to siphon off a good percentage of TiVo’s Mac-using customers.
Even then, I would question whether this would be an idea Apple would want to pursue. Why? Because before he founded WebTV, Steve Perlman made a DVR for Apple. Based on the LC platform, it never made it past the prototype stage (I managed to pick one up on eBay a few years ago). Granted, Apple-then was very, very, very different from Apple-now. Lord knows I’ve been wrong about the rumor-mill before (iPod Shuffle and Mac Mini, for instance), but any way that I look at it, TiVo is just a bad idea for Apple and its shareholders. Maybe not a bad idea, but definitely not a good one.
OK, so thrilling personal attacks aside, lemme respond to the substance of what you say:
1) “If the iPod’s success in being the “gateway drug†in switching Windows-using iPod owners to the Macintosh is unproven and still debatable, how could an Apple-ized TiVo improve upon that?”
That’s pretty misguided. iPod’s not a gateway drug to Mac. It’s the cocaine all by itself. iPod doesn’t exist to sell Macs. iPod exists to sell iPods. The point of iPod is to sell a lot of iPods, and to make a lot of money selling iPods. That’s why Apple long ago abandoned tying iPod to Macs (and actually never intended to), and why it’s been so successful. If you think of iPod as a killer product made by a company capable of making many different kinds of killer products rather than as a product meant to drive the consumer to buy another product then this strategy makes sense. If you, instead, think of Apple as the Mac company I can see how you might be confused.
But I think if you gave the article a chance you’d see I wasn’t arguing that TiVo would be great for Apple because it’d drive people to Macs. I was saying that TiVo would be great for Apple because it would make the company a lot of money for a small initial investment. ($350 million is nothing to Apple these days.) The point of an Apple TiVo is would be to sell TiVos, not to sell Macs. The Apple TiVo should work with PCs, too.
2) Your digression on the OS verges upon the meaningless, and I think this is due to your confusion re point #1 above. Here’s what you miss: Nobody cares what OS their consumer electronics devices use. What operating system does your digital camera use? Nobody cares. It’s of interest only to hackers that TiVo uses Linux. You ask and answer your own question re OSes. “Why would Apple want to add another OS to their stable?” “True, they outsourced the iPod OS….” Right, there’s your answer: Why would Apple add another OS? Because they can make money doing so. Because nobody wants an iPod to run OS X, and nobody wants a TiVo to, either.
Here’s your answer: They buy TiVo. They keep it running its current OS and software. They improve that system using current TiVo engineers. They market the product as the second in line of Apple CE devices. They make money. You seem to want to make this process much more complicated than it is.
“… Knowing Apple’s recent track record, chances are they would outdo TiVo enough to siphon off a good percentage of TiVo’s Mac-using customers.” There you are again, focussing on the Mac. But forget about the Mac for a second. The Mac is small potatoes. The Mac is not what Apple’s only about. The company is very nearly becoming the iPod company and to focus on Mac users only would be … silly, no?
So they siphon off a good percentage of TiVo’s Mac users and what? That’s not a killer product. I’m talking about a combination that can beat TiVo’s current user base, not that can beat a subset of its current user base. (Where would that get anybody?)
Comment by Farhad Manjoo — 3/11/2005 @ 5:01 pm
Farhad, while your comment was a complete surprise (and welcome despite my initial color commentary about my personal feelings on your articles), I certainly appreciate you taking the time to comment.
First, let me say, to the argument that Apple is no longer a one-trick pony (i.e., Apple no longer exists solely for the Mac), I agree. But beyond that, I’m afraid you too are guilty of not reading deeply enough.
1. The consideration that the iPod is a “gateway drug” is an opinion from the Wall Street Journal that I happen to find intriguing. While you are correct that Apple has since untied the iPod from the Mac OS, if you read the opinion piece, the hypothesis is to induce Windows users into realizing the quality of Apple’s products - i.e., “Hey, my iPod is really cool; it’s very easy to use and it works great! If this Apple product is so great, maybe I should rethink getting a Mac.” While there was always the business decision of enabling the sale to the majority market share of the computer-using public, I think the possibility of this ulterior motive is interesting enough to consider.
By extending this hypothetical situation to a TiVo purchase, consider when was the last time Apple made a completely standalone product? You’re suggesting that an Apple TiVo would be such a product. It’s in Apple’s interests to have a relational product line (even though the iPod works with Windows, it’s still a seemless extension of the Mac). My post was considering a TiVo purchase with the same goal in mind. Businesses, as a rule, don’t choose to offer a fractured product line. Your original article also seems to recognize this as you make mention of a Mac Mini-based entertainment center (the product-concept that would make the most sense, and which I address).
2. While you’re correct that the vast majority of users couldn’t care less what OS TiVo ran, I would argue that my focus on the OS is, in fact, not meaningless - it’s actually a consideration of the operational expenses after such a buyout should happen. Apple’s history is a testament to this - at one point in time they were working on up to 3 unrelated OS’s at a time (”Classic” Mac OS, Newton OS & Copeland; then Rhapsody). While there are plenty of divergent reasons for killing the Newton, the Mac OS eventually followed it. Apple has recognized the value in working off one foundation. As I mentioned in my post, yes, they outsourced the iPod OS, but they would not be in a position to do that with the TiVo OS. They would have to either go back to a model of concurrent development of unrelated OS’s (inefficient) or port whatever technology that’s worth salvaging from TiVo to an embedded OS based on the same foundation as their other two OS’s (more efficient; more advantageous in being able to provide opportunity to cross-pollinate features developed by one development team to the other products; but way more work). Apple has already shown that they think along those latter terms.
Further, in considering this line of thinking, buying El Gato would make a helluva lot more sense. Less expensive and makes use of their own technology. You caught me in not finishing my thought - they would immediately siphon off TiVo users based on Apple’s product reputation, but I would argue that they would extend beyond what TiVo would offer. By your position, they should’ve bought Sonic Blue when they were considering the development of the iPod. They not only blew the doors off Sonic Blue and are raking in a windfall of money with the iPod, they saved themselves a lot of money and quite a bit of headaches by not doing that.
My position is that it’s a bad idea to buy a DVR company period. The value of TiVo’s patent portfolio is questionable and TiVo is in dire straits because their cable and satellite partners are cannabalizing TiVo by developing their own competing hard-disk-based time-shifting technology. Since cable & satellite (an unbelievably cut-throat, back-stabbing rabid dog-type of industry) is where TV is headed, there goes TiVo’s future. Hell, they were doing that back when I was still at ReplayTV. The concept is not unique or in a black box so that TiVo can defend themselves legally. ReplayTV went down the drain because of the technology sector’s “bubble bursting” at the turn of the century. Even if they survived, they would be in just as dire circumstances as TiVo finds itself now.
I’m just saying that if (and that’s a big if) Apple wants to jump into this game, minimize your risks by going with El Gato. They’d be throwing away their money (and a lot more of it) by buying TiVo just because TiVo’s user base wants them to.
Comment by Brian — 3/14/2005 @ 9:13 am