Seeking Alpha
Long/short equity, research analyst, portfolio strategy, newsletter provider
Profile| Send Message|
( followers)  

by David Urani

On Wednesday, DVR maker TiVo (TIVO) issued a statement indicating that the Patent and Trademark Office ruled in favor of TiVo regarding a patent infringement case against competitor Echostar. TiVo's case concerned the usage of cable and satellite storage over Dish Network (DISH). In a best case scenario, TiVo could win hundreds of millions of dollars of damages and/or fees from Dish. I give a big, sarcastic whoop-di-doo to this one. This could be a great victory for TiVo on pushing away a competitive product, but when it comes down to it, TiVo's box set recording technology is ancient history, like the VCR before it.

Think of all the innovation going on right now in digital media. Apple (AAPL) is leading the charge of a huge influx of mobile media players, with gadgets of all shapes and sizes being able to not only play, but store digital television. Take an iPhone for instance, which could conceivably hold upwards of 50 TV shows already, if one were to max out their hard drive. Not only that, but regular, full sized computers themselves can hold much more. As we move along, each of these devices is also becoming increasingly compatible with television sets. Already, you can see where I'm going. The ability to store and replay video is all around us these days, and with respect to TiVo there is little there to separate itself as advantageous. In fact, there are even other DVR makers out there, and just by signing up to many cable subscriptions, one gets the option of including DVR's not made by TiVo with the service. Versus the other DVR's, TiVo seems to hold a slight edge with its internet connectivity.

That's just the current market, though. Looking ahead, televisions are going to be increasingly connected to the web, and your other computing devices. Take for instance the recent pushes by Apple and Google (GOOG) to introduce hybrid technologies that offer internet and television. If there are any two companies on Earth I would not like to compete against, they would be Apple and Google. Earlier this year, Apple introduced its updated version of Apple tv, which includes high-speed wi-fi connection, iTunes, apps, and Netflix (NFLX). Google has also been unwrapping its Google TV technology, soon to be introduced to the market. Google's system includes high-speed internet, YouTube access, apps, mobile phone interactivity, and enhanced DVR capabilities.

As of now, perhaps storage capacity is the one area that Apple and Google are coming up just a wee bit short, but don't think for a second that won't change. Each device is getting smaller and more capable by the second and in a matter of a few years it's easy to see an iPhone being able to store just as much television as a TiVo, with full television connectivity included. Beyond that, it's doubtful that we'll even need physical storage space to hold our media. That's right, cloud computing is the future (for those who don't know what that means, that means web-based storage).

For you traders out there, feel free to enjoy TiVo's good news this week, but be aware the war was lost a long time ago. TiVo is a dinosaur. For a rough comparison, see what happened to Blockbuster (BBI).

Source: TiVo Wins a Patent Dispute Even as It Loses the War