PVRblog repeated the news from Reuters that Apple is discussing a takeover of Tivo. Most opinion on this subject revolves around Apple's success with the iTunes Music Store, Steve Jobs' ownership of Pixar (aka "A big content production company"), and Tivo's vulnerable position. I think this misses the big point.
Microsoft has said many times that it wants Windows at the center of everyone's digital lifestyle, as the hub for digital content and family life. At the same time, Apple has put strong stakes in this ground, with the iPod, the iTMS, and iLife (iPhoto, GarageBand, iMovie, etc.). In effect, Apple is way ahead of Microsoft in making the digital lifestyle a reality. What they lack is the central hub.
Apple has been trying to make Mac OS X that hub by leveraging the success of the iPod/iTMS. They've even made it easy for Windows users to stream music from one system to another through the iTunes Sharing feature, which is completely cross-platform and so easy to use anyone can get it working in 5 minutes. But Mac OS X is tied to Apple's core products -- Apple computers. And therein lies the problem. Only geeks have computers in their family rooms connected to their TVs.
Tivo represents the only independent, open-platform consumer entertainment DVR vendor that's had any degree of longevity and success in the marketplace. And for that reason alone, it's an attractive target for Apple.
By making Tivo into the Apple-branded/powered equivalent of the Windows Media Center -- with Apple's cache and technical props associated with it -- Apple will have captured the cornerstone of "the digital lifestyle": the family room and TV. And this will succeed because Apple has already seeded the key "spokes" of the digital hub lifestyle, with iPod, iTunes, and iMovie. Other vendors don't have these assets, and the barriers to acquiring them are high.
To be sure, Jobs' ownership of a major content producer will be a boon should he decide to create an iLife Video Store (or whatever). But that's several steps away. The game is not video. The game is about capturing the high ground -- a ground that Bill Gates cannot buy his way into. (Microsoft has been trying to persuade infrastructure providers, such as cable TV companies, to run their boxes off Windows for years and, from what I can see, he's no further along today than he was five years ago.)
Microsoft, for its part, needs another market to dominate, soon. Its desktop dominance is under serious threat, which will only become more acute over time. Microsoft has to extend its monopoly, and has been trying to do so by leveraging Windows alone. But it has always relied upon, and will always rely upon, third party hardware producers to adopt its products. Unlike the genesis of Windows, though, Microsoft doesn't have a pre-made marketplace through which it can persuade manufacturers to sign on to their worldview. In other words, Microsoft has to produce a compelling product before it will have the market support which will equate into success for Windows Media Center (and subsequent iterations of this product).
Apple produces hardware and software. It doesn't need to rely on others to do its heavy-lifting for hardware, and clearly it is successful in this regard. Hardware will never be a core competency for Microsoft; it's always been so for Apple. This has had its downside, of course: their hardware costs more due to simple economies-of-scale (or lack thereof); cross-platform compatibility has sometimes been spotty; and it takes a lot more R&D dollars to execute both innovative hardware and software strategies. But if these fundamental problems can be overcome -- as Apple has largely done by adopting a Unix base for its core OS and by allying its hardware with broadly-used components -- then the chances for long-term success are very good indeed.
Jobs lost the operating system and hardware battle once. But that was never the war, and to believe it was is simply shortsighted. Furthermore, he's begun the process of renewing that very same battle. But the fundamental point is this: Gates and Jobs, and others like them, want nothing less than dominance of how consumers manage their content. Remember: the hand that rocks the cradle rules the world. And that's why Apple should buy Tivo.
