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Strategies & Market Trends : Market Gems:Stocks w/Strong Earnings and High Tech. Rank

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To: SMALL FRY who wrote (64281)10/2/1999 8:15:00 AM
From: puborectalis   of 120523
 
TIVO...Internet features

'Digital VCRs' enhance viewers'
flexibility in watching, recording TV
shows

by Peter Lewis
Seattle Times technology reporter

With apologies to Virginia Slims and all those who found the ad
campaign offensive, "You've come a long way baby" sprang to
mind repeatedly over the past few weeks as I spent time with two
next-generation VCRs.

TiVo and Replay, two newcomers being marketed as
personalized TV receivers, offer an intoxicating foretaste of a new
breed of large, smart, set-top boxes that turn TV into your
personal slave.

As first-generation "digital" VCRs, neither device is perfect, and
both price themselves beyond the reach of many consumers.

Before getting into some nitty gritty comparisons between TiVo
and Replay, let me make a few overall observations. (And to
dispense with any suspense, I like TiVo better, primarily because
I found it easier to use. On the other hand, I think its design
philosophy is misguided. More about that later.)

Technologically, the duo have more in common than not.
Developed independently, each uses compression technology to
convert the analog TV signal broadcasters transmit into digital
data that get stored onto a humongous internal hard drive. The
analog data are encoded, then decoded and replayed
instantaneously.

Well, almost instantaneously. If you want to see/hear how much
time it takes for the technology to work, tune two TVs to the
same channel - one with the signal coming through a Replay or
TiVo unit, the other in which the cable goes directly to the TV.
You will notice a delay of between half a second and a second.
That's how long it takes to compress and decompress the analog
signal.

Similarly, couch potatoes accustomed to instant gratification upon
clicking the remote control will notice momentary delays using the
TiVo and Replay clickers. This, too, stems from the time it takes
for the new data stream to transfer to, and bounce back from the
hard drive.

The most riveting feature each product offers is the capacity to
pause live TV. This means that should the phone ring or you need
a "time out" for any other reason, tap the "pause" button. Voila!
The program is frozen in time, even as the rest of the program gets
captured on the hard drive.

Ding ding ding! See what I mean about personal slave?

When you're ready to watch again, just hit the "play" button and
start "catching up." TiVo has a very cool green "progress" bar that
depicts where you are relative to live TV while you're catching up.

Both products also have wonderful "replay" buttons that let you
repeat ad nauseum whatever is being broadcast - say Ken Griffey
Jr.'s latest, greatest catch. Both also sport variable-speed rewind
and fast-forward buttons.

Replay has a 30-second skip forward that just happens to
coincide with the length of many commercial segments; TiVo has
an amazing frame-by-frame slow-motion capability.

Both devices also make it easy to never again miss favorite
shows. Replay uses a double "red dot" system to designate such
shows; TiVo bestows "season pass" status on them.

In addition, both devices permit you to transfer shows to your old
VCR for archiving. I found this procedure far easier with TiVo.

It's worth noting loudly and often that neither product claims to be
- nor should be - considered a replacement for a traditional VCR.
You certainly can't pop in rental tapes. And their steep price -
TiVo starts at $499, Replay at $699 - makes it doubly difficult to
rationalize rushing out to buy either one.

With both devices, it's possible to watch a program you've
already recorded while recording a new one. But if there are two
programs on at the same time, and you wish to watch one while
recording another, life gets a little complicated.

Because both TiVo and Replay do so much data processing
before displaying a program, neither permits a simple "pass
through" of the cable signal. It's possible to beat this by splitting
the cable signal, though neither device ships with a splitter. While
a splitter is not difficult to install, I suspect some consumers may
not warm up to this extra step.

Like Microsoft's WebTV before them, both new products
depend on telephone lines. Each comes with a built-in modem that
automatically dials a toll-free number to download TV program
information and to retrieve software updates for the machines.
(The devices are smart enough to back off if they sense you're
using your phone).

But unlike WebTV, which attempts to deliver the Web using a
familiar appliance, Replay and TiVo are on a mission to change
the face of TV itself.

And as digital TVs and high-definition television sets catch on,
Replay and TiVo should be well positioned. The shift should
make them more affordable; there will be no need to include
analog-to-digital decoders since broadcasters will be transmitting
digital signals in the first place.

While they are among the first to market, TiVo and Replay will
certainly not be the last of a new generation of set-top boxes:

-- Later this month, Microsoft's WebTV and EchoStar's DISH
Network (a satellite TV provider) plan to jointly introduce a
receiver that, among other new features, can freeze a TV show
for up to 30 minutes, then resume play when the satellite
subscriber is ready to watch again.

-- Earlier this spring at the National Association of Broadcasters
convention, NDS unveiled its XTV concept. The subsidiary of
Rupert Murdoch's News Corp. envisions a smart set-top box and
a huge hard drive available for program storage. Customer trials
are set to start the end of this year, with product availability
scheduled some time next year.

-- As the era of interactive TV and video-on-demand dawns,
boxes like TiVo and Replay could become the dominant
paradigm. Expect cable companies to begin providing generic
set-top boxes with storage built in.

An important but often tacit part of the business plan behind many
of these devices is built-in, two-way communication, giving eyes
on the other end the chance to monitor viewing behavior.

This could provide valuable information about a household's
viewing habits, enabling broadcasters or third parties to customize
programming and commercials, or otherwise angle for your
interactive business.

To its credit, TiVo acknowledges that it collects anonymous
information - your name is not tied to your viewing habits - and
that it may use the data for marketing purposes. The manual also
explains how to block TiVo from doing so (you must mail in a
coupon).

In my opinion, it would be even more forthright of TiVo to make
such disclosures on screen; TV is, after all, a visual medium, and
not everyone will read to the end of the manual, which is where
TiVo's privacy policy appears.

Like TiVo, Replay has the capacity to capture viewer-profiling
data, but its executives say the company isn't doing so at this time.

In most respects, I found TiVo more to my liking, mainly because
of its superior user interface.

Its menu-driven system had me sailing through smartly sorted
content in no time. A "whispering arrows" system - a consistent
set of visual cues - is a brilliantly conceived navigation tool that
makes it easy to back out or plow forward, and to take full
advantage of TiVo's features.

For example, from the TiVo Central window (a great anchor
always available by touching the remote's top button), select "Pick
Program to Record." This lets you search by name, channel, or
time, or manually record by time and channel.

At first glance, Replay's classic, TV Guide-like electronic
programming grid was the more comfortable interface. But I
quickly and happily exchanged such familiarity for TiVo's more
artful system.

I never felt lost with TiVo, and can't say the same about my
experience with Replay. Too frequently with the latter, I was
unsure about what sequence of buttons to push - and on which
remotes, Replay's, the TV's or the VCR's - to maintain my
bearings.

Replay has two primary "home" screens: "Replay Guide" to select
live TV programming, and "Replay Zones," which lets you create
customized "theme-based channels" using an onscreen keyboard
and Replay's remote.

For example, Kelsey Grammer fans might create a "Frasier"
theme to catch all new and syndicated shows. While I found this
idea intriguing, in practice it was a plodding, low-tech experience
hindered by the remote's small, sticky buttons.

TiVo also wins in the product set-up and customer-care
departments. It clearly took greater care in the writing and
thoroughness of the manual, and quick-start materials. It also
provides a toll-free customer support number; Replay does not.

There were frustrating times when I dialed Replay's tech-support
line and no one answered, which I found extremely irritating,
especially for a new product. (Along these lines, I was
disappointed that neither TiVo nor Replay offers tech support on
weekends.)

TiVo's tech-support people seemed generally better trained, and
answered my questions clearly and candidly. For example, TiVo
acknowledged its remote was not capable of controlling recording
functions on my old VCR. By contrast, Replay's tech-support
people kept insisting that I could toss the remotes for my TV and
the old VCR, but despite repeated and sometimes lengthy tries,
they never succeeded in showing me how.

Speaking of remotes, TiVo's is clearly a cut above. For its part,
Replay plans to redesign its remote in future models to more
closely resemble TiVo's.

Replay's is an industrial-sized big boy with 49 buttons, some so
tiny, and with functions labeled in print so small that I don't know
why they bothered. TiVo's well-contoured clicker, with 19 fewer
buttons, fit snugly in my hand.

Replay's machine, which Replay manufactures, is loud, even when
it's off. Its drive mechanism bugged my wife at night (we set it up
in the bedroom). TiVo's machine, made by Philips, while not
silent, is much quieter.

But as much as I liked TiVo, I was put off by its "keep the disk
full" philosophy. TiVo's designers assume that viewers will always
want a disk full of entertaining TV to watch.

So by default, TiVo scours the TV universe for programs it thinks
you will like. It makes its calculations based on programs you
choose to record, or on your use of the remote's "thumbs up" and
"thumbs down" buttons.

The buttons let you vote your preferences regarding individual TV
programs. Before I exercised my vote - but after I had
commanded TiVo to record a grand total of one program ("Law
and Order") - TiVo started fulfilling its prime directive.

It had 19 programs (19 programs!), many apparently
blood-and-gore oriented, lined up for recording based on that
single, recording decision. (Presumably, I would have received
"conflict" notices, advising me of the need to select programs to
delete to make room for new ones.)

In TiVo's defense, the system supposedly gets smarter over time.
The idea is that with a larger sample of recording decisions, it
makes better matches.

Fortunately, TiVo allows you to zap the whole suggestions
scheme. But even if you exercise that option, no additional hard
drive space becomes available to store live TV.

This has unfortunate repercussions for the truly cool live TV
"pause" feature. In other words, TiVo is so certain users will want
to fill the disk that it limits live TV storage (i.e., the "pause"
functionality) to 30 minutes. Depending on how full your hard
drive is, Replay can hold hours' worth; the captured data get
erased when you turn the machine off.

And just as Replay plans to borrow from TiVo, TiVo could
improve by copying some of Replay's features. For example,
Replay's remote has a "stop" button, something TiVo's lacks.
(TiVo thinks its "pause" button is sufficient; I disagree.) Replay
discloses how much space is left on the hard drive. TiVo does
not, and should.

Finally, TiVo has some bugs to work out. I encountered a nasty
out-of-synch problem playing back a recent edition of "60
Minutes, and watching ESPN last week. The audio was about a
half second behind the video. (TiVo says a software upgrade will
cure this).

For now, both products are only available online or by phone.
The devices are expected to hit retail stores this summer or early
fall.
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