Friday, February 27, 2004 - Technology - Tivo's Dreams Come True ... Sort Of - Technology - Tivo's Dreams Come True ... Sort Of "When Mike Ramsay and Jim Barton co-founded TiVo in 1997, they could only have dreamed that three million people would one day use digital video recorders. But now that it has happened, TiVo is facing a depressing reality: It may become the latest in a long line of technology pioneers that see competitors run away with the riches. It'll join the fellow who wrote the original DOS operating system—no, not Bill Gates—and of course the founders of Netscape, to name just two.
First, the good news. TiVo's service, which gives customers a huge array of recording and viewing options, including the much-noted ability to pause live programs, has attracted a million users. In its most recent quarter TiVo added 209,000 subscribers, more than twice as many as it signed up in the previous quarter. Sales for the first nine months of 2003 totaled nearly $100 million, a 35% year-over-year jump.
But the company has yet to make a profit. Worse, TiVo's overall DVR share is about a third and shrinking, according to Forrester Research. The market has been flooded by cheaper, more efficiently distributed products, including a set-top cable box made by Scientific-Atlanta that doubles as a DVR. The cable-box maker shipped more than 500,000 units in its first year. Cable companies like Time Warner Cable (which, like FORTUNE, is owned by Time Warner) are distributing the boxes to customers free in return for a monthly service charge that ranges from $5 to $9. (Buying a TiVo at retail costs a minimum of $199, plus $13 a month for programming data.) And a host of ultracheap DVRs made by manufacturers like South Korea's LG Electronics are about to hit retail stores."

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