Business growth paradigms and constraints

The question is Why did the iPod win and TiVo lose?. Fortune considers a few reasons. Both showed up a decade ago and both were means to record and play media.

The reasons offered include the fact that Apple had more than ten times the capitalization to leverage its effort; Apple didn’t have competitors providing bundled packages like the cable companies that TiVo faced; and the music industry is an entirely different business model than the advertising supported TV industry.

Apple also had iTunes, its proprietary software that let iPod users purchase and manage their music collections. iTunes was much more than this, however: It was pitched to music labels as a viable response to music piracy — certainly much better than any solution the industry had come up with. This helped Apple win over not just consumers, but the providers of digital music.

The music industry is still fighting a piracy phantom and stories about RIAA lawsuits hit the news on occasion (see EFF.org) but the transition to electronic distribution of music is now mainstream. Video is just beginning to catch up with companies like Netflix or Amazon but it is still difficult to legally obtain a video file for a personal library like one can with an mp3.

So TiVo is left with a superior DVR technology, and a shelf full of patents for many of its features. If TiVo does prevail in its lawsuits against Dish, it could bring in as much as $3 billion in a settlement. And it could give the company a war chest to take on other pay-television providers who sell Tivo knockoffs to their subscribers.

The comparison and contrast is that Apple is using innovative technologies with a focus on consumer demand while TiVo (and its partners) has its focus on protecting intellectual property. That leads to the patent issues that have plagued modern technology for at least the last twenty years and have yet to be resolved.

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