Monday, January 17, 2005

The New York Times > Technology > TiVo Struggles to Find Its Niche After Quitting a Deal with Cable

The New York Times > Technology > TiVo Struggles to Find Its Niche After Quitting a Deal with Cable: "TiVo's plight resembles that of many technology innovators that never find a way to profit from their elegant and sophisticated inventions. TiVo was one of the first companies to develop a device that used a computer hard drive to store television programs, a method that offered users much more flexibility than videotape. Its software is regarded as the best at helping people find programs to record of particular interest to them, earning it a cult-like following among its 2.3 million subscribers.
'As Kleenex is to tissue and Xerox is to copiers, TiVo is to video recorders,' said Jack Myers, the publisher of the Jack Myers Report, a media newsletter. 'They have an elegant user interface but it is not sufficiently differentiated that they can build a business on it.'
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So now Mr. Ramsay has decided to pull back from the discounting strategy to focus on selling advanced features to more sophisticated users - at higher prices.
"The mainstream of our market going forward is not at $99 but at a higher level," he said. He does not have much choice; TiVo's cash fell from $143 million a year ago to $89 million on Oct. 31, 2004.
His plan - called Tahiti - involves several technological innovations intended to let TiVo thrive without the cooperation of cable companies. Devices will be able to send recorded programs to personal computers and to download programs from the Internet as well, taking advantage of a standard mandated by the government that, in theory, would allow TiVo to directly connect to cable systems. Also, he said TiVo would move beyond video recorders to a broader product line involved in the convergence between computers and television, including software that would allow a home computer to record television programs. This would put TiVo into direct competition with other companies, like Sony, Hewlett Packard and Microsoft."
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