TiVo acquired…but not by Apple?

Lots of chatter this month about TiVo, which is hurting badly and therefore has become the subject of many well-intended suggestions and a completely unfounded acquisition rumors.

Funny, because about six weeks ago, at CES, Microsoft and TiVo announced a deal under which shows recorded on some (not all) TiVo boxes would be portable to Windows XP PCs and, from there, to portable devices such as the Portable Media Center.

Now, TiVo first announced the TiVo-to-Go concept at the 2004 CES, but was stymied for a year by objections (sorry, link to original story is dead) from content owners. So the concept wasn’t new. The new–and interesting–part was Microsoft’s participation. Microsoft is trying to push its Media Center PC as a digital video recorder, meaning it’s in direct competition with TiVo, who basically invented and established that market. It’s very unusual for Microsoft to get on stage with a competitor, unless….

Well, at least one reporter from a major national business publication suspected the same, and called me to ask if I’d heard any inside dope on a Microsoft-TiVo acquisition. I hadn’t, and still haven’t, but to me, the deal does make some sense. What would Microsoft get?
1. Great branding for the next version of Media Center, which will probably come out with Windows Longhorn. (In fact, I suspect that Longhorn Home will be Media Center–there may not be a super-cheap “home” version of Longhorn without the Media Center functionality.) For me, one of the main flaws with Media Center is its marketing. What is it? It’s a lot easier to say “A PC with a Tivo in it” to the average consumer than “a PC with a bunch of digital media functions, including DVR, CD ripping, blah blah blah bzzzzzzzzz.”
2. A better guide than the one Media Center uses.
3. A nice addition to the Microsoft TV platform. Instead of Comcast having to roll its own DVR function with MSTV Foundation Edition (which is what they’re doing in the first deployment, here in Seattle), Microsoft would offer them the TiVo service and let them private label it.
4. They keep it out of a competitor’s hands. Apple’s already kicking Microsoft’s buttocks in the area of portable digital audio. A $1,200 Media Center PC becomes a harder sell when you can get a $600 Mac Mini with a TV card and TiVo built into it. The Windows Media Format becomes even less relevant when not only is AAC the standard for consumer audio thanks to iPod, but QuickTime becomes the standard for consumer video thanks to TiVo/Mini/whatever Apple calls the thing.

Skeptics would rightly point out that:
1. The current TiVo boxes are based on Linux. True, but Microsoft has in the past acquired companies that use competing technology. Hotmail ran on Unix servers. Placeware (Web conferencing company acquired in 2002) also ran on Unix and was based on Java. In both cases, Microsoft bought the company to get into a new market quickly, then slowly migrated them over to Microsoft technology.
2. The guide’s better than Media Center, but not $300 million better. Hard to counter this one. Again, I think Microsoft would mainly be buying the TiVo brand–and keeping it out of Apple’s hands.


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