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Commentary: Memo to Steve Jobs--buy TiVo

Steve: We know conventional wisdom means nothing to you. But the road to mass consumer success involves video. Hire TiVo as your driver.

Commentary: Memo to Steve Jobs--buy TiVo
By Forrester Research
Special to CNET News.com
March 1, 2005, 8:16AM PST

by Josh Bernoff and Chris Charron, analysts

Steve,

You may have noticed that we suggested a combination of Apple Computer and TiVo in our latest digital home report.


Related story

The digital video recorder
company is granted new
patents, but their value
remains in question.


While we've suggested other buyers for TiVo in the past (AOL Time Warner in 2001, Liberty Media in 2002), times have changed. TiVo is at a crossroads--the company has lost its president, is seeking a new CEO, and faces fierce competition from free cable digital video recorders. Meanwhile, Apple is broadening from computers to consumer electronics and media, with iPods making up 30 percent of its revenue.

We know you've never acquired a company with a recognizable consumer brand before, but you need this one. Here's why:

The brands are compatible. Apple's and TiVo's customers both love their products--in our DVR survey last year, 19 percent of respondents used the word "love" to describe their DVRs, with TiVo users leading in satisfaction. Why? Because TiVo, like Apple, creates products with insanely great design.

Apple needs a video presence to boost its consumer electronics side. Even as you sold 10 million iPods, Americans acquired 7 million DVRs. The iPod is great for music, but extending it to other applications is problematic. You know video--QuickTime and your editing software, Final Cut Pro, prove that--but to reach mass acceptance, you must deal with television, and that means a digital video recorder. You could innovate further with TiVo's well-loved brand and patents, creating a portable video player, a video download service like Akimbo's, and a TiVo application for the Macintosh. And you could build on TiVo's experience with subscriptions to create a subscription music service.

TiVo is worth more to you than to other companies. Cable and satellite companies already have DVR offerings--even TiVo's partner DirecTV is bringing out its own non-TiVo recorder. Consumer electronics brands like Sony, facing softness in their core market and fierce competition from PC companies like Dell and Hewlett-Packard, won't have the stomach for a money-losing acquisition like TiVo. But at a market cap of $350 million, TiVo is well within Apple's reach; TiVo-branded Apple products could generate hundreds of millions in revenue in the next few years.

Think different. Buy TiVo.

© 2005, Forrester Research, Inc. All rights reserved. Information is based on best available resources. Opinions reflect judgment at the time and are subject to change.