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The Honolulu Advertiser

Posted on: Tuesday, April 27, 2004

TiVo clones may surpass DVR pioneer

By May Wong
Associated Press

Debra Baker tells people she has TiVo. But she really doesn't.

The 33-year-old New York tax consultant has a variant — a digital video recorder offered through her cable company. She didn't know what "DVR" stood for until then.

"I thought DVR was Time Warner's name for TiVo," she said.

So, like many others, Baker simply uses the leading DVR brand as the catchall term for the new love in her lounging life: a machine that lets her easily record her favorite TV shows and watch them whenever she wants.

It's a flattering curse for TiVo, whose revolutionary technology records TV programs without the hassles of videotape, letting users pause live TV, do instant replays and begin watching programs even before the recording has finished.

As more clones crop up, the pioneer that helped popularize DVRs is in danger of becoming marginalized.

"TiVo was the proponent of time-shifting TV and their name is synonymous with it, but everyone else in the world that puts together a set-top box is doing the same thing and that's not helping TiVo," said Mike Paxton, analyst at In-Stat/MDR.

The key ingredients of a DVR are a hard drive to store video, an electronic programming guide to facilitate recording, and software to tie together the technology and give the user navigational control.

DVRs are primarily reaching the mass market through cable companies, and TiVo has yet to get its software, including its widely touted user interface, into their DVR-equipped set-top boxes. They are instead using unbranded DVR software from their longtime set-top-box suppliers — Scientific Atlanta and Motorola.

"The cable train has left without TiVo onboard, and I don't think they're coming back for TiVo," said Sean Badding, an analyst with The Carmel Group.

TiVo's code also is missing from Panasonic's combination DVD Recorder-DVR and Mitsubishi's upcoming HDTV receiver with a 120-gigabyte DVR. Sharp is building DVR capabilities directly into some of its LCD TVs, without TiVo.

At the end of 2003, more than a third of the 3.5 million U.S. households with DVRs had TiVo's software and services, according to Forrester Research. More than half of that comes though TiVo's partnership with DirecTV, which has been offering DVR services with its satellite offerings for years.

But as DVRs gain in popularity — Forrester predicts nearly half of American households will have a DVR by 2009 — TiVo may be hard-pressed to hold on to its leading market share.

Time Warner Cable was the first cable operator to launch a DVR in July 2002. Just 18 months later, 370,000 DVR customers were paying an extra $4.95 to $9.95 a month for the service. Comcast Corp., Charter Communications Inc. and nearly every major cable operator all plan to widely deploy DVRs this year.

TiVo, based in Alviso, Calif., has knocked on the cable industry's doors for years — and admittedly changed its take-my-TiVo approach to a more flexible tactic of designing its software around the cable industry's needs.

"It's a kinder, gentler TiVo now," said TiVo president Marty Yudkovitz. "It's about building what your customer wants."

But why should cable companies pay more to get TiVo's technology and brand name?

TiVo's co-founder and chief executive, Mike Ramsey, maintains that clones can't compete with such hallmark TiVO features as automatically recording shows based on keywords, such as favorite actor, director or sports team. Unlike cable DVRs, TiVo machines also can guess what programs a user might enjoy based on viewing habits.

"This brain-dead knockoff stuff is not going to work," Ramsey said.

But customers of cable's offerings seem satisfied.

Baker considers her new cable DVR system "the greatest invention."

Baker and her husband also appreciated the lack of upfront investment costs to get their DVR.

The cable company installed the digital cable box for the Bakers and charges $8.95 a month. TiVo charges subscribers $12.95 a month or $299 for the life of the unit, on top of the $150 or more to get the stand-alone equipment.