Should Apple buy Tivo?

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It's not necessarily that Apple has to buy Tivo to get into the market. We know Apple has to enter this space and offer a DVR solution. They've even called DVR capability a "commodity item" . However Tivo as a company has a weakness in that if a DVR is a commodity then you have to make your money elsewhere.

So what has Tivo done? Started packing their UI with adds and selling their customers usage patterns on the backend. Not too good. It's obvious that they cannot survive with Comcast and TW offering lowcost DVR options as a monthly rental for less than half the Tivo sub cost.

If Apple were to purchase Tivo this is what I see happen.

Tivo's contract with Directv lasts until 2007. I wouldn't expect to see Apple make many changes other than beef up Mac support for Tivo2go and Home Media Option.

The fun would start up late 2006 when we'd finally see and expansion to the lineup. Here's how Apple might work it out.

Basic Unit -

$199 This unit would be for the basic consumer that wants DVR service. It would require that you get a .mac account for the Guide at $5 per month or you could opt for the .mac+ service at $8 per month which would include all the services that the current .mac includes like storage space, email, sync features etc. You would be able to listen to your iTunes store music on all devices.

Mid Unit -

$299- This unit would contain a larger HD and built in wireless capability. You would have the ability to link to your own personal audio and video files on your computer as well as photographs.

Power Unit -
$499- This would the the unit for AV aficionados. Large 300+GB hard drives. Built in DVD Burner. Firewire ports for adding more external hard drives. This unit would be based on the Sony/Toshiba/IBM Cell processor. It would have an OLED screen built in so that the tag data from the music tracks or annotations added to pictures would be displayed without the need to pipe them through to the TV.

The basic features of these units would be. A standard width casing. USB 2.0 on all units. Firewire on the top unit. The top two units would playback your files on your home network. Ethernet would be included on all models. HDMI connectors and analog connectors would be on the back. SPDIF audio as well. Wireless standard on top two models 802.11n. The top unit would allow for better encoded video due to the Cell processors power. CableCARDS standard on top two models.

Software -
The software would look similar to Tivo's UI and contain all the great features like Wishlist and Season Pass however you would have new areas of the software(depending on model) the beefier units would have pages for managing your own files, broadband internet files and cable content. Support for stores would be built right in. The units would launch with Netflix download support, Amazon.com CD/DVD store access and of coure Apple's very own iTMS. Each page would be branded. Eventually the store API would be opened up to other companies who want to pay the license fees associated.

The beauty of this setup is that Apple doesn't buy Tivo to "simply" become yet another company with a DVR. They would beef up this strategy so tha they are supporting iTunes Music Store, your own personal files and broadband content all in one device with one remote (bluetooth on top two models). Consumers won't buy into "just" a DVR but they will buy into something that manages "all" their media. Apple can either create this on their own from scratch or build off of the start that Tivo has created. Sign me up for the $500 model!