Speculation on the Google-Motorola Deal and TiVo

Posted on Tuesday, August 16, 2011 by MegaZone

TiVo Logo I just made a pretty damn long post about the Google buyout of Motorola Mobility. But there was one other aspect that I felt was better off in a separate post. And here it is.

This acquisition has spurred talk in some circles about TiVo’s fate. Why? Well, a number of people think TiVo is a candidate for a buyout. TiVo still has a poison pill to prevent a hostile takeover, but that is expiring in November. And even with the pill in place the BoD can accept a buyout offer at any time without triggering the pill. The pill just helps prevent hostile bids.

There has been speculation that Google could be a suitor. TiVo has a history with hardware, a successful DVR platform, and deals with MSOs. All things Google could use to beef up Google TV – but now all things they have in Motorola, only moreso.

On the other hand, TiVo is involved with patent lawsuits with Verizon (who uses Motorola HW) and AT&T (who also uses Motorola HW), having recently finally settled with Dish Network for $500 million. If Google feels that they may have a liability in these suits, it is possible that they would seek to have them settled as part of the acquisition. Possibly even buying TiVo in order to do so, along with acquiring their patents which could be useful for Google TV and Motorola’s own DVRs. Though I think that’d be a drastic step to take, they could likely settle with TiVo for less than the cost of a buyout. They’d really have to see value in owning the whole package to go that far.

Personally, while my dream marriage would be Google buying TiVo and integrating it into Google TV, I think that is much less likely to happen now that Google has MMI – on top of their recent SageTV acquisition. They’ll have everything they need to roll their own super STB in house once the Motorola deal closes.

On the other hand, if I’m Cisco, Motorola’s largest competitor in the STB market, I might be looking to beef up my product offering. Cisco and TiVo already work together – Cisco is providing the hardware for Virgin Media in the UK and ONO in Spain. So they have a solid track record. Cisco’s STB software has perhaps a worse reputation than Motorola’s, and offering a TiVo-based solution could be a real shot in the arm for them. Especially if Google does push Google TV onto Motorola DVRs.

Cisco also has a retail presence through Linksys, and increasingly under their own brand. They’re familiar with STB hardware, DVRs, retail, and TiVo’s software. They could conceivably add the TiVo Premiere, Premiere XL, Premiere Elite, and Preview to their STB lineup as is for both retail and MSOs. Motorola did something similar when they offered a couple of Moxi-based DVRs and the MoxiMate to MSOs. Those units were unlike any others in their lineup. That would be a rapid way for Cisco to offer a TiVo-based solution, and then they could incorporate the interface into their other STBs going forward.

Of course, that’s all pure speculation. Cisco seems to have little to lose in buying TiVo though. There’s nothing to upset the existing MSO deals in the US, or in most other countries. Most of the foreign TiVo deals are using TiVo developed or Cisco HW already. It could cause some friction with the DirecTV deal as that is using Technicolor HW, same for the Scandinavian deal with Canal Digital, but that could be addressed in contracts. And even if it killed the deals, I think Cisco could live with it. The DirecTV deal is approaching two years past due now and there’s reason to be skeptical about it ever coming to fruition at this point anyway.

I don’t think it would cause an issue for deals like the Best Buy Insignia TVs as there is no direct competition with any Cisco products. They’re complimentary, not competitive.

On the other hand it would give Cisco’s STB product line a boost when trying to land deals with MSOs against Motorola, especially if the latter gets Google TV.

In light of the Google-Motorola deal, as pure speculation, I think I’d consider Cisco the leading candidate to acquire TiVo at this point. I don’t necessarily think it will happen, just that if anyone did I’d put them in the lead.

As for other suitors that have been speculated on.

Apple – No way. They have a strong ‘Not Invented Here’ culture. TiVo is Linux based, Apple uses BSD, it’d be a major rewrite to bring TiVo over to iOS to merge it with Apple TV or the like. And Apple is all about providing content silos via iTunes, I’m not sure a DVR fits their plans.

Microsoft – Doubtful. MS is mildly allergic to Linux. They already have Media Center and successful IPTV STB software – AT&T runs on it. They also have the Xbox 360 for OTT content. Media center extenders are neglected, but still out there too. If MS wanted to get into the DVR business I think they’d roll their own based on their existing STB software before buying TiVo.

Rovi – Maybe. Rovi, formerly known as Macrovision Solutions Corporation, has several product lines, including software for set top boxes. If they had an inclination to get into DVRs and get onto more MSO boxes, they might do so via TiVo.

Dish Network or EchoStar – Doubtful. There was speculation that they may buy TiVo as a way to settle their long-running lawsuit. But now that they’ve settled the case I don’t see Dish or EchoStar having a good reason to buy TiVo. EchoStar already has one of the better DVR platforms out there, along with Slingbox, so they have little to gain in a buyout.

DirecTV – Doubtful. With the new DirecTiVo sliding further and further to the right, DirecTV hardly seems excited about TiVo. They already have a deal in place that covers TiVo’s patents, and they seem to be happy evolving their own DVRs. And they already acquired ReplayTV’s IP a few years back, so they have DVR patents of their own too.

I’ve seen other speculation – that NDS might buy them to kill the competition off or that Comcast (or another MSO) will buy them to monopolize the TiVo interface on their network, etc. But all of those seem even less likely to me.

Right now, I think Cisco would gain the most from acquiring TiVo.

Of course, then again, Cisco has been pulling back from consumer products, such as in shutting down Flip. So I might be completely off base.

But, like I said, this is all just speculation. It is fun to talk about, but I’m not going to put down money on any of these deals happening.

So, what do you think? What does the Google-Motorola deal mean for TiVo, if anything? Or who do you think might be a suitor for TiVo? Or do you think that’s backwards and TiVo is going to use part of their $500 million award from EchoStar/Dish to buy someone else? Or just grow organically?

Leave a comment with your thoughts!

Posted in Broadband, Cable, DirecTV, Dish Network, DVR, EchoStar, Google, Google TV, Motorola, Scientific Atlanta, TiVo | Tagged , , , , , , , , , , , , | 13 Comments

Google’s Motorola Buy is About More Than Phones & Patents

Posted on Tuesday, August 16, 2011 by MegaZone

Google Logo The big news Monday was, of course, Google’s $12.5B purchase of Motorola Mobility. (Though Motorola has $3B of cash on hand, so when & if the deal closes I suppose it is more like a $9.5B deal since Google gets the cash.) That’s Google’s largest acquisition to date and certainly big news no matter what. It is also a big bite to swallow. Motorola Mobility currently has around 19,000 employees, while Google reportedly has around 30,000. Without massive layoffs that’d be a nearly 60% jump in one bite. That’s a lot to digest.

Yes Android, smartphones, and patents are all key factors – but they’re not the only ones.

Google is acquiring all of Motorola Mobility, Inc. (MMI), pending regulatory approval of course. When most people think of Motorola they think of cell phones. And ‘Mobility’ certainly plays into that. But when Motorola split into Motorola Mobility and Motorola Solutions, mobile phones weren’t the only products Mobility got. The other major product line they have are cable products – set-top boxes, DVRs, CableCARDs, Tuning Adapters, and cable modems. Plus head-end systems for the MVPDs. Motorola Mobility is the top cable STB vendor in the US, and a leader in cable/IPTV hybrid systems as the sole hardware provider to both Verizon FiOS and AT&T U-Verse.

While Android is a focus for phones, remember that Google has a little Android-based product called Google TV. And just two months ago they acquired DVR software maker SageTV. SageTV’s products covered DVR and placeshifting, with cross-platform support and excellent UI design. While no plans have been announced, most speculation (my own included) has been that Google is looking to add recording and/or placeshifting to the Google TV platform. Google TV has failed to really catch on to date, with hardware partners Logitech and Sony slashing their prices on Google TV products.

Keep in mind that Android phones struggled for their first two years of life, until the Motorola Droid launched in late 2009 with Android 2.0 and really jump started growth. Later this year Google TV has it’s first big upgrade coming out, based on Android 3.1 Honeycomb, which will add apps, a new UI, and other features. Additional hardware partners are also expected to enter the market with the new version.

Now Google owns the largest set top box maker in the US. Motorola has hardware design and production expertise, not to mention all of their existing MVPD relationships. The one area they really get dinged on is their software. Rarely does anyone have anything good to say about cable STB software. But what if the Google TV OS is ported to Motorola STBs? MVPDs could offer their customers a glossy, polished UI with numerous over-the-top features. Roll in the SageTV capabilities and you have something that can power DVRs and placeshifting hardware.

Motorola doesn’t sell video STBs at retail, but they do sell cable modems. How about an STB which combines Google TV and a cable modem in one box? It might sound odd, but remember EchoStar/Sling Media was pitching a Slingbox/cable modem at MSOs a few years back. Since Google TV is all about OTT content, being the home gateway gives it the most direct access to the pipe, and therefore the best performance. It would also allow MSOs to offer a leased version with dedicated access to MSO-provided content that wouldn’t count against a data cap, etc. Just as Virgin Media does with their TiVo in the UK. Of course, there really isn’t much to stop Motorola from taking one of the cable boxes to retail as a CableCARD device if they wanted to, just as the TiVo Premiere Q/Elite is slated for both MSOs and retail.

With Motorola and SageTV Google has the ability to truly build a ‘God box’ which could serve as cable modem, DVR, placeshifter, and OTT STB. Again, very similar to VM’s TiVo play in the UK. All powered by Android in the guise of Google TV. If Google does go down this road, putting a Google TV-powered DVR on Motorola HW and marketing to MSOs, TiVo would face the biggest competition to date, IMHO.

Note that, aside from Android & smartphones, this is the one area Google CEO Larry Page explicitly called out in his announcement of the deal:

Motorola is also a market leader in the home devices and video solutions business. With the transition to Internet Protocol, we are excited to work together with Motorola and the industry to support our partners and cooperate with them to accelerate innovation in this space.

But that’s not all MMI makes – just look at their consumer products and commercial products. They not only make mobile phones, they also still make home phones. Google has been pushing the growth of Google Voice hard, adding calling features into Google Talk, Gmail, etc. What about a Google Voice phone for the home? They could compete with the likes of Vonage & Magic Jack, offering cheap – or, knowing Google, even free – VOIP phone service run through Google Voice. They could even make fancy units with touchscreens, powered by Android. And video calls through your Google TV, of course.

Let’s step away from hardware just for a moment, and look at software. In particular, remote control software. I don’t mean your TV remote, but software like LogMeIn or Citrix for remotely connecting to a PC or Mac. Or, to be more specific, I mean the Timbuktu Remote Control Software from Netopia. But who is Netopia owned by? Right, MMI – and now, therefore, Google.

Google recently added Citrix support to Chrome OS, but what if they could bake Timbuktu into Chrome OS and Android, and sell, or give away, the server piece that you install on your PC or Mac? Maybe give away single-user versions for end users, and sell multi-user corporate versions.

Suddenly all of those Chome OS netbooks and Android phones & tablets take on a new capability. Being able to connect to a PC, or central corporate server, to access software not (yet) available on Chrome OS or Android. Or simple to do heavy lifting tasks better suited to a beefier platform. Or just for remote control – operate the conference room PC from your tablet. It opens things up. Sure, you can do this today with third party apps, but if they bake the client in and make the server piece free, or cheap, it makes it ubiquitous and I’d bet usage would increase – along with sales of the client devices.

From software over to services, remember Google is starting their broadband experiment with a fiber network in Kansas City. And they’ve talked about, or tried to launch, WiFi and broadband services in other locations. Now they’ll own a top vendor of cable and DSL modems, as well as home networking gear. That certainly seems like a leg up for a company looking to get into broadband.

Getting back to hardware, Motorola also makes the Motonav line of GPS devices. There’s another opportunity for Android I suspect. And even without going that far, they can be closely integrated into Google Maps. Plot your map on Google Maps and send it to your device. Record your trip and upload it to Google Maps, etc. There seems to be a natural link there.

I’m not sure where Motorola might fit in with Google’s announced plans for Android@Home, but I have a feeling there is a connection there. MMI acquired home automation company 4Home last year. MMI makes various consumer devices as I listed above, and they have a retail presence and name recognition. I could see Google capitalizing on that to launch Motorola branded Android@Home devices and bring the 4Home features into an Android@Home suite.

Of course, there is also their accessory business to go with all of their other products. And a few product lines that might not be a direct fit for Google, like Bluetooth headsets, two-way radios, and even baby monitors. Still, they’re further evidence that this is about more than Android smartphones and patents.

Of course, that’s not to downplay the smartphones and patents, I believe they were the largest single factor in this acquisition. But I think Google could’ve licensed, or purchased, the mobile patents for much less than $12.5B. Or they could’ve bid for just the smartphone group and not the whole company. Yes, it is possible that they’ll spin off other pieces once they close the deal, but I think they grabbed the whole enchilada because they can exploit a number of different groups.

If I had to single out just one key issue in this deal it would have to be patents. MMI holds approximately 17,000 patents in the mobile space alone, with another 7,500 pending. Remember last month when Apple, Microsoft, Research in Motion, Sony, Ericsson and EMC teamed up to buy 6,000 Nortel patents for $4.5B? Google just grabbed four times as many patents & patents pending for less than three times the price – and acquired a few thriving business lines in the process as a bonus. I don’t expect Google to go off suing other vendors as an offensive measure, but you can be damn sure they’ll be using their patents defensively if anyone comes after Android. And now they have a pretty big stick.

As far as Android smartphones go, it isn’t as clear cut as it may seem. Google cannot afford to show favoritism to Motorola and upset their other Android partners. As I covered last month, in the US HTC sells more Android phones than Motorola, with Samsung gaining from third place. And worldwide Samsung is the leader in Android phones. Asus has the top selling Android tablet with the Eee Pad Transformer, while Motorola’s Xoom has seen tepid sales at best, overshadowed by the likes of the Samsung Galaxy Tab 10.1.

The point is, Google can ill afford to upset their other partners and have them leave the Android fold. HTC & Samsung both produce Windows Phones as well, and Samsung has their own, in-house OS: Bada. Samsung has done a lot to bring custom apps to their Android devices to enhance them, but they could turn those resources toward Bada if they felt they weren’t getting a fair deal with Android. While Windows Phone is an option, it may not be more appealing than Android now that Microsoft has all but acquired Nokia and has already committed to giving them more freedom with Windows Phone than the vendors using it today. They’re already playing favorites, while Google is promising not to:

This acquisition will not change our commitment to run Android as an open platform. Motorola will remain a licensee of Android and Android will remain open. We will run Motorola as a separate business. Many hardware partners have contributed to Android’s success and we look forward to continuing to work with all of them to deliver outstanding user experiences.

But there are other options. HP has floated the idea of licensing WebOS to other vendors. Or someone could pick up an existing project like MeeGo and move it forward. So Google has to tread carefully. They can’t turn Motorola into their private skunk works, giving them access to insider knowledge not given to other partners. Nor could they prioritize changes to Android that benefit Motorola unfairly compared to changes requested by other vendors. And, worst of all, they don’t want to risk a massive schism with someone like Samsung taking Android and forking it completely away from the Google trunk.

Of all the divisions Google just acquired, I think they can least integrate smartphones. It is the one piece they really need to keep at arms length to avoid upsetting other partners. They may need to show some caution with Google TV, as they have partners for retail devices, but they could easily do that by keeping any Motorola Google TV products out of retail and marketing them solely to MVPDs. That would leave retail to their other partners.

Google’s position isn’t an easy one. Frankly, the historic record isn’t a good one. They’re facing many of the same issues as Palm did back in the day, or Nokia with Symbian. Trying to produce hardware using an operating system that you are also licensing to other vendors whom your hardware competes with. Palm had a period of success with licensees like Sony, Handspring, Handera, Symbol, Lenovo, Samsung, Qualcomm/Kyocera, Tapwave, etc. But over time, as Palm expanded their product lines, friction developed with their licensees.

Once Palm acquired Handspring, bringing the Treo line in house, that really drove away their remaining licensees. Many of whom turned to Windows Mobile as the only real alternative at the time. Palm tried the disastrous split into PalmOne and Palm Source, but that really didn’t do much to satisfy their partners.

Nokia had a similar history with Symbian, which was technically not entirely owned by them but de facto they really controlled it. Sony Ericsson and Motorola were the two big licensees, but they also had Samsung, Lenovo, Fujitsu, etc. Nokia finally acquired full ownership of Symbian so they could spin it out as its own open source group, in an attempt to make it more appealing to other partners. But it was too little, too late – and rather than attract more vendors, they lost those they already had. (Mainly to Android.) Nokia eventually gave up and pulled Symbian back in house – before finally giving it up entirely for Windows Phone.

Google needs to avoid a similar fate with their partners. Hopefully they can find the right balance to pull it off.

Posted in Android, Blogs, Broadband, Cable, DVR, Google, Google TV, HDTV, Mobile Devices, Motorola, TiVo | Tagged , , , , , , , | 4 Comments

ATSC Begins Work On Broadcast 3D TV Standard

Posted on Tuesday, August 16, 2011 by MegaZone

ATSC Logo The Advanced Television Systems Committee (ATSC), the group behind the television standards known by the same initials, today announced that they’ve begun work on ATSC standards for broadcast 3D TV. As announced:

The groundbreaking work on the new 3D-TV broadcast standard builds on the extensive efforts over the last year by the ATSC 3DTV Planning Team. This new standard, which could be completed in a year, will allow:
3D content delivered on one ATSC terrestrial channel to fixed receivers, with delivery of both views (left and right eye) in real-time, and;
3D content delivered on one ATSC terrestrial channel to Mobile/Handheld receivers, and delivery of both views in real-time.
3D content delivered in non-real-time.

While HDTV in the US is often called ‘ATSC‘, it isn’t a single standard, but rather a collection of standards. The standards for mobile/handheld are collectively known as ATSC-M/H.

It isn’t clear yet just what the final 3DTV standard will entail. Today’s broadcast ATSC for fixed receivers uses MPEG-2 with a maximum resolution of 1080p30. However, back in 2008, MPEG-4/H.264 was added to ATSC with support for up to 1080p60, but this isn’t in use today as main ATSC receivers don’t support MPEG-4/H.264. Most stations are using 1080i or 720p MPEG-2 today.

As with the existing ATSC standards, which give broadcasters numerous choices in resolution, frame rates, etc., the 3D standards will likely do the same. I expect the final standard will give broadcasters a choice of a few different ways to encode 3D video.

As I discussed in my recent post on the state of 3D, 3D broadcasts in the US to date have used a de facto standard known as frame packing. In this system two video frames, left and right eye, are ‘packed’ into one video frame for encoding. So you might take a 1080p frame, which is 1920×1080, and pack two 960×1080 frames into it in left-right packing. Or a 720p frame, which is 1280×720, might have two 1280×360 frames inside in top-bottom packing. The end device handles splitting the frames and displaying them. The obvious drawback is halving the resolution in one direction.

The final standard may include frame packing as one option, albeit a low quality one. I note that backwards-compatibility is mentioned:

“The addition of 3D-TV capability to the DTV broadcast standard will foster new broadcast services while preserving the integrity of legacy TV receivers by adopting a system that allows for simultaneous delivery of 2D HDTV, Mobile DTV, and 3D programs within the same channel while ensuring backwards compatibility,” [ATSC President Mark] Richer said.

To be backwards compatible with today’s receivers, this probably means MPEG-2 using one of three systems – left/right frames, 2D+Delta, or 2D+Depth. Left/right frames is basically frame packing, transmitting two full video frames (one per eye). For 2D display just one frame is used. The drawback is the bandwidth, broadcast ATSC maxes out at 19.4Mbps; by way of comparison Blu-ray supports up to 48Mbps. Sending two full frames means you have to sacrifice the resolution and/or turn up the compression.

So the most likely systems are 2D+Delta or 2D+Depth. Both transmit one full 2D frame, which is displayed on 2D sets. They differ in how they provide the 3D effect. +Delta transmits encoding for how the other frame differs from the full frame that is sent. So if the full frame is the left eye, the encoding is the delta, or difference, to produce the full right eye image – left+delta = right. +Depth instead transmits a ‘depth map’ that overlays the image. This basically tells the display the ‘z-index’ of items in the image. From that it computes the 3D version of the image and generates the left/right images. This is a lot more work for the display device, but can save on bandwidth and allow for higher resolution/quality images. Since Europe standardized 3D for DVB-T on 2D+Depth, it seems likely the US will do the same – or at least include it as one option.

While this would allow broadcasts compatible with all existing MPEG-2 ATSC receivers, it would not provide an optimal 3D experience due to the compromises involved.

Since H.264 isn’t in wide use today, I think there is still a chance for a clean H.264 3D solution. Since 1080p60 2D images are supported, it would be possible to do 1080p30 3D with two full frames – every other frame is left/right. Even better, 1080p30 3D using 2D+Delta/Depth would allow reduced compression in the base 2D image, for a higher quality image.

Since the pipe is the same size for MPEG-2 or MPEG-4, using MPEG-4 will always provide for a better quality image. No matter which video codec or 3D system is used, the 3D image quality will necessarily be lower than plain 2D as you need to encode more data with the same fixed maximum. All else being equal, of course. In other words, if you use the minimum compression required to fit the stream in the pipe the plain 2D image will be less compressed than the 3D image of the same resolution and frame rate as the 3D image needs to fit both the image and 3D data into the pipe.

H.264 will provide the best possible quality; but no matter what they do they won’t be able to match Blu-ray’s 3D quality as it can push full 1080p60 frames to both eyes, with each eye having more available bandwidth than an entire ATSC channel.

Via TWICE.

Posted in HDTV, Press Release | Tagged , , , | 4 Comments

Time Warner Cable to Acquire Insight Communications for $3B

Posted on Tuesday, August 16, 2011 by MegaZone

Time Warner Cable Logo Maybe this explains why Time Warner Cable apparently missed the memo about allowing users to self-install CableCARD, they’ve been distracted by discussions on acquiring Insight Communications for $3 billion. Based on the NCTA’s March rankings, TWC is the fourth largest MVPD in the US, and second largest cable MSO, with 12,357,000 basic video customers, after Comcast’s 22,763,000. (Satellite MVPDs DirecTV and Dish Network take the second and third spots with 19,407,000 and 14,191,000, respectively.) Insight is the thirteenth largest MVPD, eleventh MSO, with 693,000. So the merger leaves TWC in fourth place, but closed the gap with Dish.

The press release cites 750,000 customers for Insight, the discrepancy is probably explained by different counting methods – the NCTA is concerned only with video, while data and voice customers are counted in the higher figure. The PR states Insight is“serving approximately 537,000 high-speed data subscribers, 679,000 video subscribers and 297,000 voice subscribers”.

I think we’ll see continuing consolidation in the MVPD space given the gulf between the top four MVPDs and fifth place Cox at 4,899,000 with numbers dropping by roughly a million for every two spots on the list, until it is under a million after twelfth place Mediacom at 1,175,000. With broadband content access, OTT content, mobile apps, etc., all becoming important competitive offerings the larger providers, with economy of scale on their side, will have an easier time of it. I think this will put pressure on the mid-sized MSOs to merge with peers or acquire smaller MSOs to boost their userbase, and for the smaller MSOs to look for a buyout.

Time will tell.

(#6 Charter, #11 Suddenlink, and #16 RCN are the three MSOs who’ve committed to using TiVo hardware.)

Via CNET News.

Posted in Blogs, Cable, Press Release | Tagged , , , , , | Leave a comment

Get Your Game On With Amazon – Buy One, Get One Half Off

Posted on Friday, August 12, 2011 by MegaZone

Amazon Logo It isn’t quite as good as a Buy One, Get One or BOGO deal, but a Buy One, Get One Half Off sale isn’t too bad either. (I thought about writing it BOGOHO, but if you parse that wrong… I’m not sure a BOGO HO is ever a good deal is all I’m sayin’.)

It is pretty simple, buy one of 67 select titles, get another one half off. Of the 67 total titles on offer, 32 are for PS3 and 35 are for Xbox 360. Prices range from $59.99 down to $18.11, and you’re limited to only two games under this promotion, with the discount being applied to the lower-priced of the two. So I’d recommend looking for games of similar price – the higher the price, the more you save. (And the more you spend, of course.)

Have at it.

Posted in Amazon, Gaming | Tagged , , , , | Leave a comment