To: Steve Jobs
From: Forrester Research
Re: Your Mass-Market Dreams
You may have noticed that we suggested an Apple-TiVo combination in our latest digital home report.(see endnote 1) 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 lost its president, is seeking a new CEO, and faces fierce competition from free cable DVRs. Meanwhile, Apple is broadening from computers to consumer electronics and media, with iPods making up 30% 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% of respondents used the word “love” to describe their DVRs, with TiVo users leading in satisfaction.(see endnote 2) 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.(see endnote 3) 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 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 DVR. Consumer electronics brands like Sony, facing softness in their core market and fierce competition from PC companies like Dell and HP, 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 revenues in the next few years.
Think different. Buy TiVo.
1. The development of the digital home creates new power positions for consumer companies. See the December 17, 2004, Market Overview “The Battle For The Digital Home.”
2. DVR users love their DVRs. On a five-point scale of satisfaction, TiVo rates 4.6, slightly higher than cable DVRs. See the August 31, 2004, Trends “The Mind Of The DVR User: Acquisition And Features.”
3. A device can’t serve two masters well. See the February 11, 2005, Trends “iPod photo: Stick To Music.”