Jim Barton is a cofounder and CTO of TiVo.  Prior to co-founding TiVo, Jim was President and CEO of Network Age Software, VP and General Manager of the Systems Software Division at Silicon Graphics (SGI), and CTO of Interactive Digital Solutions Company, a joint venture of SGI and AT&T Network Systems created to develop interactive television systems.  

Jim observes that as a start-up, TiVo's ability to approach the question of how to leverage the emergence of digital television signal delivery was much less constrained.

"Naturally, cable companies approached it from the point of view of compression -' how do you cram more television into the same bandwidth?'  But since we were computer guys, we asked 'what can you do with all of this digital information if you have a computer receiving it?'   We initially imagined a home media center type service, and got funded based upon this notion.  Within 6 months, we researched the available networking technologies and realized that that there wasn't enough connectivity and bandwidth in the home. So instead, we took the notion of client-server media delivery and collapsed it into a single box, focused on real time compression and storage, a concept that consumer electronics firms were highly skeptical of.  Traditional consumer electronic companies think in terms of embedded systems and small amounts of memory. Again, we're computer guys…we took advantage of the hard disk and our knowledge of integration to essentially build a set top computer. Fortunately, our investors felt comfortable letting us change direction."

TiVo's path to success has followed the common 'pioneer' roadmap. They selected their own component technology, and offered an integrated and easy to use complete product. Jim points out that pioneers face the dual challenge of both consumer adoption of a new category, and technology development in an unproven area. 

"If you are starting a whole new thing, you have to put it all together   Especially with something really new, like our category.  Since consumers never really saw TV as broken, it had to work flawlessly to avoid discouraging them. Integration and design is a lot of the value in new consumer hardware -all of the components need to work together.  We got where we are through integration."

Jim and the TiVo management team saw an opportunity to grab a leadership position, but he isn't surprised that their success has attracted competition from both the incumbent cable companies and their suppliers. 

"The cable companies were convinced that video on demand was going to work.  They only took action in our category when they realized that we were having success. They want to keep control of both their customers and the technology that is used in the home. Left to their own devices, nothing would have happened, but our proving the market has lead inevitably to the cable companies and their suppliers following in."

Jim understands that TiVo faces a common dilemma of pioneering firms -- their integrated stack is being challenged by existing industry suppliers offering component technology.

"Our licensing is for the whole system. A lot of people would like to us to license component layers, but we got where we are through integration. The problem is that in pulling it apart you can break it. It isn't designed to be pulled apart.  The industry technology suppliers who supply most of the cable equipment can use their leverage and channel presence to encourage cable companies to use their equipment, whether their products are as good as ours or not."

In the end, Jim believes that TiVo is adept at innovating and building end-services and products for consumers, while existing cable technology suppliers have more leverage and less revenue conflict with the cable channel.  Rather than attempt to compete horizontally, TiVo will compete by continuing to innovate and redefine the market.

"It comes down to how big the market is and more importantly what is the "real" market.  Right now, we see ourselves in the business of helping consumers take advantage of mass amounts of storage in the home.  But we recognize that things change. The market that we are after doesn't exist yet, so DVR definitions and analyst-defined market share aren't necessarily relevant.  We are continuing to spend on R &D to be ready, and doing it in a direction that has long-term viability.  Our platform is built to be extendable, and we see that there are many more markets developing that can take advantage of our basic technology."

From Hunter or Hunted - Chapter 6