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Discussion Starter · #1 ·
(Well, relatively high anyway)


1 - Hardware


2 - Software


3 - Service


4 - Other?



Just wondering what the forum users thoughts were on the subject?
 

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Has anyone (who can say anything about it) seen even any hints as the cost of the TeraLogic 810 and 850 chips?
 

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I doubt that the cost is being held high because of hardware. It seems to me that the first generation PVRs were 20 G when 20 G was pushing the limit, so I'm guessing that their cost on the drives alone was near $200. Today 60-80G is a very popular PVR and their cost on these drives is sub $100. So they have a $100 savings there. Additionally, MPEG 2 chipsets and tuners have come down a fair amount in the past 3 years.


I think what's keeping the price up is lack of demand as much as anything. Unless Tivo and Sonic Blue can finally make people understand why they would want to own one of these, the price may never come down as it will remain a niche product. But, if they do take off, I believe we will see manufacturers basically giving them away if you sign a 2 or 3 year contract for service.
 

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It's really amazing how it changes your viewing habits, but I still can't seem to explain it to people.



....plus once they hear the price!
 

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A) Hardware.


B) Software (and development, constant updates, etc)


C) Tech support staff (Think $20k-$40k each employee)


D) Business costs (distribution, advertising, etc)
 

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Discussion Starter · #7 ·
Along the same lines, which PVR do you think would have more mass appeal (sell the most)?


1) PVR with same software and service but less input/outputs, small HDD, and without other hardware features (VGA, networking, etc).


2) PVR with all current hardware but without the service (guide data).


IMO, there's no point in a PVR with less software features, since there no cost savings to remove existing features, the only cost would be in development of new features.
 

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I guess it depends on what you mean by high.


Until TiVo and Sonic Blue can drive the service cost per subscriber down substantially they will need to continue to charge about $250 lifetime just for the service. With enough volume, these companies can begin to sell anonymous user data for enough to stop charging customers for the service. That would be allow a big price cut. Also, if they can amortize the costs of R&D over more units it can further drive down costs.


A 40 hour Series II stand alone TiVo receiver can be sold profitably for $299 including retail margin. That is a substantial cost reduction from the Series I box.


/carmi
 

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Discussion Starter · #9 ·
Just wondering that someday, they'll be offering free PVR's, and just charge for service.


Something like.


Free PVR.

First ? months free.

After that, just $??/month.


They'll have to compete with the free PVR hardware that the cable and satellite co's are/will be offering (of course the service would be extra).
 

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Make and sell a DVR box for whatever is necessary to make a profit ($300. or less would be a practical number) and let it be used without an EPG or "service". If buyers wish let them buy compatibly formatted EPG data from anyone who wants to sell it or offer them your "service" if you want to provide it and can do so profitably.
 

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Lots of people thought advertising would carry "Free ISPs" and one-by-one they dropped like flies. So I don't think we'll ever see advertisers picking up the cost of the hardware and service.


To me what keeps these boxes expensive is the small customer base. As I understand, there are only 1/4 million or so customers. Tivo is a long way from breakeven and while the loss, according to their last quarterly is narrowing, it's still burning throgh cash to stay afloat. Lowering the cost alone, you get further away from profit, the stock tumbles, and you run out of money.


So in my mind, they need to race to profitability by getting the customer base up to their breakeven target, and I don't have a clue what that is. Maybe a million customers? Part of doing this is to lower the cost of the box, and market the hell out of it.
 

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Quote:
Originally posted by John Silver
Lots of people thought advertising would carry "Free ISPs" and one-by-one they dropped like flies. So I don't think we'll ever see advertisers picking up the cost of the hardware and service.
Unlike ISP's that had to rely on people not disabling their popup ads, viewer data and truly targeted ads can be very profitable. ISP's typically received advertising from other dot com companies. The PVR companies can sell to people like Coke and the Networks. Also, the DBS and Cable companies may just decide that it is worth paying for the service and the hardware to decrease churn.

Quote:
To me what keeps these boxes expensive is the small customer base.
Agreed.

Quote:
As I understand, there are only 1/4 million or so customers.
That number is very low. TiVo alone has over 422,000 subscribers.

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Tivo is a long way from break even and while the loss, according to their last quarterly is narrowing, it's still burning through cash to stay afloat. Lowering the cost alone, you get further away from profit, the stock tumbles, and you run out of money.
TiVo claims in their quarterly reports that they are on track with their estimates to break even this calendar year. I think they are counting on a big holiday season this year with the release of the DirecTiVo Series II box and their $49 Xbox killer. I hope they are right. It would be good for the market for someone to prove that this is a business that can be profitable.

Quote:
So in my mind, they need to race to profit ability by getting the customer base up to their break even target, and I don't have a clue what that is. Maybe a million customers? Part of doing this is to lower the cost of the box, and market the hell out of it.
Sonic Blue has said they plan to release a PVR that is cheaper than any other player on the market. I hope that is still true. When TiVo releases its Series II DirecTiVo later this summer, I expect that DirecTv will spend a lot of their advertising money to promote it. Based on experience, I expect that DirecTv will heavily subsidize the box and that it will sell for under $100 to new customers and existing customers.


/carmi



(BTW, just kidding about the Xbox killer.)
 
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