Ramsay, who will retain his post as the digital video recorder company's chairman, thus opens the door to new management at a crucial point in TiVo's history.
In recent weeks, the company has announced a number of new business and technology ventures, including one with
, which TiVo hopes will increase its popularity among consumers and expand its revenue.
But last week the satellite operator
made the long-expected announcement that it will focus on selling a rival product to TiVo. DirecTV, whose distribution of TiVo has been a key element of the company's growth, will be using a box made by a fellow affiliate of DirecTV controlling shareholder
The promise of the new ventures juxtaposed with the disappointment of DirecTV's shifting loyalties illustrates the uncertainties facing TiVo. Undoubtedly, the company deserves credit for pioneering the technology of a home digital video recorder, an increasingly popular device that allows TV viewers to easily view their favorite programming on their own schedule and own terms.
"We have achieved a tremendous amount since we started the company," read a statement Wednesday from Ramsay, who has served as TiVo's CEO since co-founding it in 1997. "We have had a fundamental impact on television viewing and believe strongly that the company has huge upside potential, in a massive market, going forward. I believe it is a natural evolution of any company to have a transition of leadership as the company grows and matures."
But, as technical pioneers such as Netscape (in the world of Web browsers) and Hayes (in the world of modems) have already illustrated, developing an eponymous technology is no guarantee that a company will develop a sustainable, profitable business. And TiVo is far from persuading the market that it will meet a fate different from that of its illustrious predecessors.
TiVo's shares, which traded as high as $12.94 in early 2004 and briefly touched $78 near the height of the tech boom in January 2000, dropped 5 cents Wednesday to trade at $4.15.
TiVo optimists can point to several different features and services that will make the company's service attractive to users. There's the free TiVoToGo service, which lets users to transfer programs from their DVR to a laptop for subsequent viewing.
At first glance, the appeal of this service appears limited; it works with only certain TiVo standalone boxes, it requires a home network, and it requires a user who wants to transfer programs to a laptop for subsequent viewing.
But TiVo does have a measure of faith and support from Microsoft in this area. At the Consumer Electronics Show in Las Vegas last week, reports TiVo, Microsoft Chairman Bill Gates "demonstrated how television programs stored on a TiVo box can be transferred to a Windows XP PC for playback on Windows Mobile devices, including Portable Media Centers, and media-capable Pocket PCs and Smart phones."
As a Microsoft executive put it in a statement, "TiVoToGo is going to be an important element in our efforts to help consumers get content from the TiVo box to a growing number of Windows Mobile-based devices that make portable digital entertainment a reality."
Also at CES, TiVo announced its plans for a next-generation service strategy, dubbed "Tahiti." In essence, the company hopes that it can transform the TiVo box simply from one that allows them to program their own 24-hour marathon of
, or to skip past the boring parts of the Super Bowl to watch the commercials, into one that's a full-service convergence of home entertainment, mobile entertainment, photography, music and personal computing.
"The next generation TiVo service will offer consumers unprecedented choice, bringing together music, home videos and digital photos, broadband and broadcast content on their own 'Personal Entertainment Network,'" the company says.
Strategy and Analysis
TiVo, however, isn't the only company with such ambitions. Among the others are two that have both infinitely deeper pockets than TiVo, and a much stronger grip on a distribution network:
. Consumer demand for a personal entertainment network is unknown, and it may end up being negligible. But if there is any value to it, chances are that
Comcast's Brian Roberts and
SBC's Edward Whitacre will be there first.
Presumably TiVo's announced plans to launch a video-on-demand service with
fall into the category of TiVo's personal entertainment network. But again, TiVo will have to contend with other VOD distributors, many of whom will have both the money and the distribution network to make life difficult for TiVo.
In the meantime, TiVo has to contend with the here and now of sustaining suscriber growth. The outlook on that front dimmed last week with DirecTV's debut, at CES, of a DVR from News Corp. affiliate
"We'll support our existing TiVo customers,"
quoted DirecTV as saying. "But our core initiatives and new customer acquisition will focus on our new DVR."
And that's bad news for TiVo. As Piper Jaffray analyst Gene Munster pointed out in a research note last week, DirecTV accounted for 75% of TiVo's new subscribers in the quarter ended in October 2004. But in 12 to 18 months, wrote Munster, who has a market perform rating on TiVo and a target price of $6, "new customer capture will become increasingly difficult for Tivo, absent significant relationships with cable and satellite service providers, unless enhanced technologies can generate demand for Tivo on a standalone basis."