OK. We all know, that despite it's recent win with the FCC (who let Tivo transmit data to users over the Net), Tivo is in deep trouble. This is because network owners have co-opted Tivo's technological advantage, and rebuilt as a peripheral component of their platform.
I think Tivo's brilliant. But I also think that strategically, they were ultimately ahead of their time. Here's my take: Tivo business model really
rested on them being the iTunes of advertising - essentially, controlling access to a captive market. Now, the most efficient way to capture rents from suppliers - advertisers - is to offer buyers ads at a price they're willing to pay. That means dynamic targeted product placement, contextual branding, and similar tactics - basically advertising without the compromise costs users pay in watching painfully stupid 30-second clips of utter nonsense.
The tragedy is that these tactics aren't technologically possible right now. If they were, think about what a great game Tivo could play. Now, I'm sure that Tivo has many tricks up it's sleeve, like it's recent pseudo file-sharing tactic, and it's recent announcement of price competition. But these tactics are not going to save Tivo - because switching costs for consumers with bundled functionality are incredibly high.
Tivo's best hope right now is that the networks kill their own Tivo substitutes, by pushing costly ads on consumers whose price is greater than the cost of a Tivo. Now, this is likely to happen. But can Tivo stay in business that long? Certainly, it's platform and filesharing strategies give it some breathing room. But I think it will have to do something revolutionary to have a real shot at letting the network owners shoot themselves in the foot.
Something like stimulating the development of a market for entirely new (not evil) advertising mechanisms, and then using suppliers to subsidize the cost of Tivos to users. That
would be leveraging it's resources to build a new source of advantage.
Umair - interesting take on this. Can't say that I agree with your perspective but I do agree with your conclusion - that TiVo's probably done. Don't see why they didn't try to do something prior to this...