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TiVo, the granddaddy of digital video recorders, or DVRs, enjoys a cult following noted for its evangelical fervor. There are few worse cocktail-party quandaries than being sandwiched between a TiVo owner and the wall. Should you ever find yourself in such a spot, prepare for a 45-minute sermon on the glories of pausing live TV, fast-forwarding through the ads, and watching King of the Hill reruns whenever you damn well please, without having to worry about setting a VCR timer. The devotee will even use TiVo as a verb, as in, "Why don't you come over tomorrow night, 'cause I just TiVo'd three episodes of Crank Yankers."

But off-the-charts customer satisfaction has yet to turn TiVo into a rollicking success. The Alviso, Calif.-based company has burned through $400 million since 1997 and has never once shown a profit. Losses are narrowing as the subscription base inches toward 500,000, but the future is still precarious. TiVo hopes to get in the black by January. With only $26 million in cash reserves and a stock price well below the $4 mark (down from a bubble-era high of $76), it can't wait much longer.

You can ascribe TiVo's struggles to the business axiom known as "first-mover disadvantage." Technology pioneers typically get steamrollered, then look on helplessly from the sidelines as a bunch of Johnny-come-latelies make billions. First movers, the theory goes, are too smart for their own good, churning out gizmos that are too expensive or too complex for the average consumer's taste. The big boys survive their gun-jumping—think of Apple and its proto-PDA, the Newton, which might have dusted the rival PalmPilot had the company merely waited a year or two to iron out its kinks. Smaller fry go kaput.

The technology roadkill that TiVo's brain trust ought to be studying is Commodore, the defunct company behind the venerable Commodore 64 home computer. If you're on the younger side of Gen X, chances are you learned to program a few lines of BASIC on a C64, which sold 22 million units in 1983. Nearly a third of all computers sold worldwide that year bore the Commodore logo. The conventional wisdom held that the company's follow-up couldn't fail.

Henry Kissinger, Hack War Criminal Bush's Cuban Missile Fantasy TiVo, You're History

Except it did. Miserably. The Commodore Amiga was a multimedia machine designed to become the centerpiece of the family den. The designers foresaw the not-too-distant day when people would jack their VCRs and televisions into a PC like the Amiga, which featured such revolutionary perks as a full-color screen (a big plus in the age of green-and-black Apple IIc monitors) and stereo sound. The Amiga could be a video editor, a gaming console, a musical instrument. Geeks were dazzled.

Joe Six-Pack, however, was stumped. VCRs and video-game machines had just recently made a splash in the mass market. Now Commodore was asking people to add yet another box to their living-room array. The Amiga suffered from an identity crisis that the company never solved. Was it a gaming machine? People were happy enough with their Ataris. A music synthesizer? Cheap Casio keyboards were ubiquitous. A video editor? The camcorder revolution had yet to take hold. The Amiga flopped, and Commodore slowly lapsed into bankruptcy. Now the Mac renaissance is being driven by Amiga-like multimedia features, much to the chagrin of busted Commodore shareholders.

TiVo faces a similar story arc. It's had a tough time convincing consumers that its flagship DVR is a must-have. One tack the company has taken is to compare the device to a souped-up VCR. But people already have VCRs, and they don't understand why they should plunk down $399 (plus a $12.95-per-month subscription fee) for another one. Yeah, but this one's digital, a TiVo executive might insist. A DVD player is digital, too—how does a Best Buy salesman explain the difference in 25 words or less, especially with inexpensive DVD recorders about to the hit the market? As the CD-burning craze proves, people like their storage media cheap and portable, rather than entrusting everything to an unseen hard disk.

And compared with a VCR or DVD player, a TiVo is difficult to set up and maintain. It's not rocket science, but to mangle the words of H.L. Mencken, lots of businesses have gone broke underestimating the technophobia of the American public. For a nation that still prefers to access the Internet via the "sandbox" of America Online, hooking up a hard disk to a television seems like a fairly Byzantine task. When a British media consultancy recently distributed some TiVos, 30 percent of the recipient households "never really got to grips with them"—or, in other words, they preferred to let the pricey boxes gather dust rather than waste another second figuring out the labyrinthine menus.

TiVo's saving grace could be licensing. The company is pursuing partnerships with cable and satellite providers that hope to incorporate DVR technology into their hardware. People prefer getting one fat bill from their cable company to sending a monthly check to some DVR company in Silicon Valley. TiVo had better get cracking, though, as lots of competitors are eager to offer their DVR technology to the likes of Time Warner and Comcast. Boston's Trace Strategies recently estimated that ordinary cable boxes will account for 76 percent of the DVR market in 2005, while stand-alones like TiVo will barely register at around 3 percent.

The other 20 percent? Gaming consoles like Xbox 2 and the next generation of Sony PlayStations will likely include DVR technology. So, too, will a slew of bargain PCs, which are increasingly being bundled with DVR emulator software that can turn a Dell into, well, a TiVo. Just like the Commodore folks envisioned way back when, the family computer may soon become the conduit through which all entertainment flows—a jukebox, gaming center, and steroid-pumped VCR all rolled into one. The realization of the Amiga multimedia dream could kill TiVo's one-trick pony recorders.

If TiVo does fall by the wayside, it will leave behind a throng of adoring fans—much like the Amiga, which still attracts its fair share of nerd aficionados. First movers get creamed more often than not, but they leave behind much-beloved corpses.

Why TiVo is destined to fail. posted October 9, 2002 Brendan I. Koerner A new audio technology puts the Rolling Stones live in your living room. posted August 20, 2002 Fred Kaplan Search for more Gizmos in our archive. Henry Kissinger, Hack War Criminal Bush's Cuban Missile Fantasy TiVo, You're History

		What did you think of this article? Join the Fray, our reader discussion forum POST A MESSAGE READ MESSAGES Notes From The Fray Editor: The Fray is filled with impassioned TiVo users (who all hate the ad campaign), impassioned TiVo stockholders (who have hope, even in this market) impassioned Amiga users (the software is still, it seems a going concern), and Microsoft haters (who note that Slate's parent has rolled out a number of unsuccessful competitors and that Xbox 2 will have an integrated DVR. Remarks From The Fray: What a load of crap, did they actually PAY you to write that? Or did you just get laid-off of the ultimate TV team after Tivo sales kicked your ass? Do you listen to the investor conference calls? Sure they have cash burn, all start-ups do, but they are RAPIDLY approaching profits. The introduction of the series 2 units and DirecTIVO series 2 are virtual sellouts. The 500K subscriber mark will be passed this year. The last run of DirecTIVO's resulted in a SELLOUT. How many startups can say that? And why does the stock price matter? We're in one of the largest stock market declines EVER. Almost all stocks have been hit. The Newton, C64 and Amiga are terrible comparisons. They were propretary products built my a single entity. Tivo is SOFTWARE, licensed to many companies. -- Jberger (To reply, click here.) As I see it, it's the failure of this new technology to directly challenge the bundling in the entertainment industry's current business model. This was Napster's real threat: Consumers don't like having to buy a CD with a dozen or tracks that sound like the artist mailed it in just so they can get unlimited-play rights on the one enduring single. Nor do I see why I should have to subscribe to a cable package that includes the Comedy Channel and a whole bunch of other things just so I can watch South Park. Economies of scale can kiss my ass. TiVo buyers are, among the other faults of the technology enumerated in the article, still hostage to channel availability, especially as dictated by the greatest sources of evil in the known universe, the cable companies (If Osama wanted to do some more extensive damage to the American way of life, he'd have gone into the cable business). The ability to timeshift and skip over commercials is merely the illusion of a choice when none really exists. When you can sell me the opportunity to buy, download, and watch at my leisure a show I like on an episode-by-episode basis, then I'm buying. -- Daniel Case (To reply, click here.) What killed the Amiga was the same positive feedback effect that killed Betamax. In the personal computer and VCR industry, as more and more people adopted a particular platform the ease of obtaining software and support increased, offering a greater incentive to pick the more popular platform. This started a positive feedback loop that culminated in the situation that you see today, where one particular platform (MS-DOS/Windows and VHS) dominated the market, not because of inherent superiority but because of an early advantage in market share. -- Robert Bowsher (To reply, click here.) The Amiga also came out when the original team that built the system cashed out and left the novel dedicated sound and video chip-based technology in the hands of marketers. It also came out when the Mac came out, and the mac was hands down positioned to cream all non-typing contender applications....with a solid, growing base of technically superior staff to support a wildly creative marketing team...despite its original black and white limits. -- zeitguy (To reply, click here.) (10/9)