As the digital video recorder space begins filling up with companies aiming to provide more features and lower prices, I can't help but see obvious paralells with the computer industry.
Apple created the first personal computer real people could use, and a few years later they followed it up with the first computer with an operating system made for humans. But over the years other companies offered products that were "good enough" and "not the best, but cheap!" and the IBM PC clones totally dominated the space. Apple has always stuck to being a hardware and software company, so they could never really meet the prices that a competitive PC hardware market created. While they did allow clones to spring up for a short time, they quickly put the kibash on the companies that undercut their own sales.
Apple still does their own hardware (though many components are cheap off-the-shelf PC parts) and their own software, but they are definitely the Betamax of the computer world. While they arguably offer a better interface and are easier to use, they hover around 5-10% 3% (thanks gen) of the marketshare while most consumers prefer the VHS of the computer world: the $400 plain boxes running windows. Even the places you buy computers reflect this. Apple has a line of bright, beautiful stores that you can spend thousands of dollars in, while you can walk into any Wal-Mart, muscle past the screaming kids and throw a nameless PC into your cart that'll set you back a few hundred bucks.
Like Apple, TiVo pioneered the market. TiVo has been around since 1998, and their first systems stored just a few hours and were quite expensive, but their software was revolutionary. Being somewhat of an interface designer myself, I was in immediate awe of the simplicity and functionality available in my first TiVo system. While the prices have fallen somewhat, the market sector is still a little stagnant, with TiVo just barely in the red, and a whole host of new competitors arising. Cable companies, startups, and even open-source projects have taken dead aim on TiVo's market and will make the space quite competitive very soon.
The consensus of everyone I talk to that uses these alternate DVR devices is the same: they rave about the features and/or the price, but lamment the lack of a simple to use and stable operating system that TiVo offers. But as prices fall and companies like Time Warner start offering DVRs for only a couple extra bucks a month, you have to wonder what combination of low price and "good enough" features it will take to gain lots of new customers (customers that TiVo will lose to the cheaper offerings).
As the competitors circle the market like vultures, I wonder if TiVo will resign itself as the Apple Computer of DVRs, where its snooty users will put stickers on their cars, make up 5 or 10% of the DVR space, and tell you all about how refined their TiVo operating system is. Or, will TiVo become the Microsoft of DVRs, acting more as a software and service company that licenses their OS to anyone that wants to throw together some basic parts?
Word on the street has always been that TiVo loses money on every unit they sell for $249-349 — that the hardware costs them more than the price, and their real business model is the reoccuring monthly service fee. It seems to me that due to ever-falling prices for basic commodity computer hardware, the prices of TiVo boxes must fall, or TiVo should send in the clones. Anyone can throw a hard drive, motherboard, and cheap processor into some plastic, but it takes real work to produce an operating system that works wonderfully and features an interface both geeks and grandmas can like.
Seeing the first of new TiVo-licensed products and reduced cost through TiVo Basic is a good sign, and they've even hinting at built-in DVD writers — something that would probably take TiVo another year to release in-house on their own boxes. I'm hopeful TiVo learns the lessons of the PC world and considers going the software, service, and licensing route. I'd hate to see them flounder in a tiny corner of the market they helped create.