TiVo is now offering an extended warranty

[samo]

Originally Posted by CrispyCritter

Shall we count the ways you are comparing apples and oranges, Samo?
1. The Repairmaster $20 warranty (I used the j&r version) is for 15 months, not two years.

Yes, it is $20 a year for under $200. Tivo comes with 1 year warranty (90 days cost you nothing, 90 days to one year cost you $49 for an exchange)
That makes total warranty 2 years

2. It absolutely doesn't apply to the TiVo, the TiVo is more than $200 retail.
3. You have no evidence that a $149 price should be used, and that TiVo makes money on the $149 price (given your past comments I would expect you to know better).

What evidence do you want? TiVo charges $149 for the exchange out of warranty. That is a value you get buying the extended warranty. If TiVo doesn't make money on this deal, then they should charge more. My assumption is that it should cost TiVo less to exchange the unit than to ship refurbished unit without exchange. So $149 sounds right to me.
Regardless, you as a consumer get $149 value.

4. The DirecTV and Dish costs are for an expanded service and cost $180 for 3 years - how are they comparable at all?

At $60 per year you receive the coverage for $500+ worth of equipment plus $75 service call. Just about the right ratio - approximately 10% of the out of warranty value.
Not a direct comparison, but the illustration that industry standard for extended warranties is about 10% of the value per year

How many of these things do you expect TiVo to sell in a year? 3,000-5,000 sounds a bit optimistic to me. So that's total income of $60,000 to $150,000 a year. It's not going to be a profit center!

Sounds optimistic to me as well considering that TiVo sells about 10,000 new units a month. Certainly not a profit center, but warranty pricing is in line with the industry standard and anything more would not sell at all.

[CrispyCritter]

Originally Posted by samo

Yes, it is $20 a year for under $200. Tivo comes with 1 year warranty (90 days cost you nothing, 90 days to one year cost you $49 for an exchange)
That makes total warranty 2 years

Wrong. At least according to the link I gave (I gave my source of info about RepairMaster - what's yours?) The RepairMaster warranty is 1 year after the end of the 90 day labor warranty. Only 15 months.

Originally Posted by samo

What evidence do you want? TiVo charges $149 for the exchange out of warranty. That is a value you get buying the extended warranty. If TiVo doesn't make money on this deal, then they should charge more. My assumption is that it should cost TiVo less to exchange the unit than to ship refurbished unit without exchange. So $149 sounds right to me.
Regardless, you as a consumer get $149 value.

Wrong. You couldn't get the RepairMaster warranty you cited for a TiVo, that's all I'm saying. The TiVo costs too much. The $149 figure is entirely irrelevant to that discussion, unless you can prove that RepairMaster is charged the full price of all equipment it supplies as replacements. I agree the consumer gets $149 value, but that rest of your argument is unsubstantiated, and proves nothing about whether TiVo will be making a profit.

Originally Posted by samo

Sounds optimistic to me as well considering that TiVo sells about 10,000 new units a month. Certainly not a profit center, but warranty pricing is in line with the industry standard and anything more would not sell at all.

That's fine to claim, but how does that show that TiVo is going to make any money off of this! You're the one claiming that TiVo will not be losing money charging the given rates. You haven't shown that at all. All you've shown is that TiVo is charging just a little bit less than the cheapest budget warranties out there, but that doesn't imply TiVo is making a profit.

Or are you saying you agree that TiVo will not make money on this, and are just quibbling for the sake of quibbling?

[steve614]

Originally Posted by CrispyCritter

The cheap price may also be a sub-text inducement - "our DVRs are so reliable that we can price support this cheaply". But that may be reading too much into TiVo marketing minds.

I am curious what the possible marketing angle could be.
What you said here is logical. IMO Tivo is making a bet that their DVRs are going to be rock solid and their hoping consumers gamble on trying a Tivo.
The debate on the worth of an extended warranty aside, I think a lot of people feel "comforted" knowing that their investment is covered for a longer period of time.
I know I've seen people complain here about Tivo not offering an extended warranty. Tivo is now catering to these people.

So now, if Tivo plans to make money, they better make sure the DVR is rock solid.

[samo]

Originally Posted by CrispyCritter

Or are you saying you agree that TiVo will not make money on this, and are just quibbling for the sake of quibbling?

I'm not arguing about TiVo making money on the warranty. Neither you or myself have any solid information to determine that - TiVo does. And I hope that they checked the numbers before they offered the product.
All I'm saying is that TiVo pricing is in line with the rest of the industry. Your assumption that for TiVo to make money they have to charge 3 times as much is a complete speculation based on nothing but your assumption that TiVo offered extended warranty to increase sales of new units. If Tivo charged 3 times as much, it would put the cost of the warranty at 30% of value per year. Completely ridiculous number.

[CrispyCritter]

Originally Posted by samo

I'm not arguing about TiVo making money on the warranty. Neither you or myself have any solid information to determine that - TiVo does. And I hope that they checked the numbers before they offered the product.
All I'm saying is that TiVo pricing is in line with the rest of the industry. Your assumption that for TiVo to make money they have to charge 3 times as much is a complete speculation based on nothing but your assumption that TiVo offered extended warranty to increase sales of new units. If Tivo charged 3 times as much, it would put the cost of the warranty at 30% of value per year. Completely ridiculous number.

Then you're just quibbling (and quibbling incorrectly as I've pointed out earlier (and still very incorrect with your 30%)).

My argument has been that TiVo is not trying to make money with their extended warranty; that they are not charging nearly enough to make it worth offering the warranty as a source of profit itself. Instead, they are offering the extended warranty as an inducement to sell more TiVos.

[lessd]

Originally Posted by CrispyCritter

Then you're just quibbling (and quibbling incorrectly as I've pointed out earlier (and still very incorrect with your 30%)).

My argument has been that TiVo is not trying to make money with their extended warranty; that they are not charging nearly enough to make it worth offering the warranty as a source of profit itself. Instead, they are offering the extended warranty as an inducement to sell more TiVos.

Unless somebody on this form is from TiVo and has their (TiVos) exchange data I don't think anybody can tell if TiVo will make money on this program, and what does it matter, it is the cost to the customer that is important and I think $10/year is a reasonable charge that people that want a extended warranty will be willing to pay. We can all give our opinions about its value to TiVo but without data I don't know the value of such opinions. It still the value to the customer (not TiVo) that counts.

[bicker]

Originally Posted by lessd

It still the value to the customer (not TiVo) that counts.

People don't just talk about what matters to them. Many people also think more broadly. In the case of TiVo, it is especially important, since what's good for TiVo is typically good for its subscribers, given that TiVo, itself, gives us such a good deal that the company doesn't make profit. It is a reasonable concern that the service we receive, and the future promise of both enhancements and new products, is going to be greatly affected by the extent to which TiVo can derive value from its offerings. The "blind consumer" perspective is myopic.

[lew]

The cost for a repairmater exchange warranty is $30 http://www.jr.com/repair-master/pe/WAR_ARMX300N/ and the pp is correct, you only get 15 months of coverage.

Originally Posted by samo

And how much did you expect extended warranty to cost for $149 item (out of warranty exchange price)?
RepairMaster exchange warranty (for replacement with a new unit, not refurbished) is about $20 and they do not lose any money.
DirecTV and Dish for $5-6 a month cover all of your equipment (including DVRs) and service calls. I bet they don't lose money either.

[lessd]

Originally Posted by bicker

People don't just talk about what matters to them. Many people also think more broadly. In the case of TiVo, it is especially important, since what's good for TiVo is typically good for its subscribers, given that TiVo, itself, gives us such a good deal that the company doesn't make profit. It is a reasonable concern that the service we receive, and the future promise of both enhancements and new products, is going to be greatly affected by the extent to which TiVo can derive value from its offerings. The "blind consumer" perspective is myopic.

And without TiVos data how does anyone know that this warranty will not be a good deal for TiVo.
Most people purchase any item without thinking about if it will make the store or suppliers better off with their purchase, if they want the item and like the price they buy, many places have gone out of business because people would not pay what that business needed to run a profitable business (Tweeters, CC, ect) if that what you mean by (The "blind consumer" perspective is myopic) than that is what most consumers are when it comes to making a purchase.

[bicker]

Originally Posted by lessd

And without TiVos data how does anyone know that this warranty will not be a good deal for TiVo.

[SARCASM]Do you mean that people would second-guess professionals with data, supplanting the professionals' experience, expertise, and access to relevant data with their own personal opinions?[/SARCASM]

Yes, your insight is sound: A lot of people do love to blow smoke when a company does something that they don't like, or even just when they simply want to have something to complain about a company regarding.

[lew]

The warranty tivo is selling is provided by Service Net Warranty Corp. I believe the company also sells service contracts through LG.

I suspect this will be a good deal for tivo. It might motivate some customers to purchase a tivo, some customers want to control the costs of repairs. Tivo might make a commission from the sales. It may also make it easier for tivo to stick to the terms of the warranty. I know you're only a week past the warranty, it's a shame you didn't spend the few extra dollars for the service contract.

[aine]

Originally Posted by lew

Log into your account. It's also being offered to existing subscribers.

Where exactly do you see the offer (i.e. which screen of "my account" on tivo.com)? I haven't been able to find it yet on any of my TiVos....

[lew]

Originally Posted by aine

Where exactly do you see the offer (i.e. which screen of "my account" on tivo.com)? I haven't been able to find it yet on any of my TiVos....

It's the same screen that shows the subscription status of each tivo. I was offered the extended warranty for a unit activated less then 90 days. Maybe it's only being offered to units stilll under warranty.

[mr.unnatural]

I haven't seen any details as to what this warranty actually covers, but I could have missed it. Does it cover total repair and/or replacement of a broken Tivo? Does it cover both parts and labor? Based on Tivo's track record with warranty replacements, I'm guessing you'll get a refurbished Tivo in place of the one you send in. Usually that means you get a used Tivo with a refurbished hard drive (also used, BTW). Refurbished 250GB drives probably sell for less than what the basic extended warranty will cost.

Since Tivo buys hard drives in huge quantities they get them dirt cheap. The number of warranties they sell will undoubtedly exceed the number of Tivos actually repaired. I'd say it's a pretty good bet that Tivo or the company selling the warranties will make money on the deal. They wouldn't be selling them otherwise.

90-95% of all Tivo problems are generally hard drive or software related, both of which are quick and easy fixes. The only way I can see anyone getting their money's worth from an extended warranty is if there are issues with the electronics themselves. Even if you install a drive upgrade and void the Tivo warranty, you have a much better warranty on the drive you installed (usually 3-5 years) than what Tivo gives you in the first place. You've really got to decide whether or not the extended warranty is a good value for you.

[scandia101]

http://www.tivo.com/abouttivo/polici...dwarranty.html
http://www.tivo.com/buytivo/faqs/about_warranties/

[mr.unnatural]

Originally Posted by scandia101

http://www.tivo.com/abouttivo/polici...dwarranty.html
http://www.tivo.com/buytivo/faqs/about_warranties/

That's about what I expected. Since the original warranty covers replacement within 90 days with a new unit, any claim made after that period expires will net you a refurbished unit. There's no guarantee that you'll even get a new unit within the 90-day window either. I believe that's left up to the discretion of Tivo and whatever stock they have on hand at the time.

[dlfl]

Originally Posted by mr.unnatural

That's about what I expected. Since the original warranty covers replacement within 90 days with a new unit, any claim made after that period expires will net you a refurbished unit. There's no guarantee that you'll even get a new unit within the 90-day window either. I believe that's left up to the discretion of Tivo and whatever stock they have on hand at the time.

I wonder what the turnaround time will be for exchanges on this ?

[scandia101]

Originally Posted by mr.unnatural

That's about what I expected. Since the original warranty covers replacement within 90 days with a new unit, any claim made after that period expires will net you a refurbished unit.

They send out refurbs as replacement under the 90 day warranty also.

[lessd]

Originally Posted by scandia101

They send out refurbs as replacement under the 90 day warranty also.

New units within 30 days only, as you can get a refund on the TiVo and service within the first 30 days. TiVo may send out a new unit after 30 days but you can't count on that.

[BobCamp1]

Originally Posted by lessd

Unless somebody on this form is from TiVo and has their (TiVos) exchange data I don't think anybody can tell if TiVo will make money on this program,

Of course Tivo is making money. Would you propose a business plan to your boss where your company isn't guaranteed to make money on it?

Tivo gets a cut. Service Net / New Hampshire Ins. Co. gets a cut. Electronic retailers selling it get a cut. You pay for shipping (both ways if the unit turns out not to be defective), and also the cost and shipping for your surge protector you are required to install and may have to present as evidence. And only the first unit you get is eligible.

Tivo charges $149 to repair any unit. They are making money off this as well.

For the end consumer, it will cost you $40. If you think there is a $40/$149= 26.8% or greater chance your Tivo will bite the dust in its second and third years but not in its first year, buy the warranty. If you think that less than one out of every 4 Tivos are junk, or if you think your Tivo is most likely to bite the dust in its first year, don't buy the warranty. Or if you think you can fix the #1 failure (hard drive) yourself, don't buy the warranty.

[dlfl]

Originally Posted by BobCamp1

Of course Tivo is making money. Would you propose a business plan to your boss where your company isn't guaranteed to make money on it?...........

TiVo might not need to make money on this plan, if they estimate a net positive effect on their overall profitability, e.g., by selling more subscriptions.

[bicker]

My guess would be that there is no significant advantage to TiVo in terms of added subscriptions. The fact that you're willing to take more money to help protect a customer against a potential failure of your product isn't something you can really build much of a marketing campaign around. I agree with Bob that this is likely simply a no-lose proposition for TiVo, that they're sharing their customer list, and co-marketing the services of a partner, in return for a cut of the money.

[CrispyCritter]

Originally Posted by BobCamp1

Of course Tivo is making money. Would you propose a business plan to your boss where your company isn't guaranteed to make money on it?

Tivo charges $149 to repair any unit. They are making money off this as well.

For the end consumer, it will cost you $40. If you think there is a $40/$149= 26.8% or greater chance your Tivo will bite the dust in its second and third years but not in its first year, buy the warranty. ...

I think there's almost no chance they are making money on the actual warranty. As dlfl said, they make the money off of more subs. Almost by definition, anyone who buys the warranty is happier that it's being offered than they would be otherwise.

I estimated max total gross income of about $100K for the warranty program, and fixed costs (eg, training for phone reps) will chew up most of that. TiVo just doesn't sell enough units to make any profit on it. And I strongly think they lose money on the $149 exchange also, after all the support calls etc are included. But they'll make that money back on the ongoing sub.

Your facts on the warranty are wrong, but that doesn't change much. It's only $30 for the warranty, and you save $49 even during the last 9 months of the first year if it gets replaced then.

[lessd]

Originally Posted by BobCamp1

Of course Tivo is making money. Would you propose a business plan to your boss where your company isn't guaranteed to make money on it?

Tivo gets a cut. Service Net / New Hampshire Ins. Co. gets a cut. Electronic retailers selling it get a cut. You pay for shipping (both ways if the unit turns out not to be defective), and also the cost and shipping for your surge protector you are required to install and may have to present as evidence. And only the first unit you get is eligible.

Some on this have suggested that TiVo may only want to break even on the new warranty thinking that they will sell more TiVos this way..my comment you quoited was that we don't know for sure what the total business plan is/was for this new warranty service, people can only guess and your guess is as good as anybodys.

[BobCamp1]

Originally Posted by lessd

Some on this have suggested that TiVo may only want to break even on the new warranty thinking that they will sell more TiVos this way..my comment you quoited was that we don't know for sure what the total business plan is/was for this new warranty service, people can only guess and your guess is as good as anybodys.

You don't tell your shareholders that the goal of your new program is to break even. Tivo has to definitely make money off of it. It doesn't have to be the main cash cow. But they need to make a decent profit from it. And it needs to be self-sustaining.

Plus, if you aim to break even, what happens if you estimate wrong and profits fall short or expenses are more than expected? You're now guaranteed to lose money! That's no way to run a business.

Finally, who on Earth buys a consumer device based on its extended warranty?

[lessd]

Originally Posted by BobCamp1

You don't tell your shareholders that the goal of your new program is to break even. Tivo has to definitely make money off of it. It doesn't have to be the main cash cow. But they need to make a decent profit from it. And it needs to be self-sustaining.

Plus, if you aim to break even, what happens if you estimate wrong and profits fall short or expenses are more than expected? You're now guaranteed to lose money! That's no way to run a business.

Finally, who on Earth buys a consumer device based on its extended warranty?

Do you really think this extended warranty is important enough to even spend time telling shareholders about? Again my main point is still, we are all making a guess as to the financial gain to TiVo is, that this program may bring. (TiVo itself may also be guessing but at least they have some data). TiVo has tried other programs in the past that went away, like no up front hardware cost but a bigger monthly fee, charging for PLUS TiVo software back in the early Series 2 days (I am not talking about Lifetime Plus that you could purchase on some DVD type TiVos), no Lifetime Service, than back to lifetime lifetime service. We can all guess as to why TiVo does anything (does anybody think TiVo is making a lot of money selling pizzas ?).

[CrispyCritter]

Originally Posted by BobCamp1

You don't tell your shareholders that the goal of your new program is to break even. Tivo has to definitely make money off of it. It doesn't have to be the main cash cow. But they need to make a decent profit from it. And it needs to be self-sustaining.

Baloney. TiVo tells its shareholders that lots of its actions are only to break even. The TiVo Store is an example. TiVo has publicly said on multiple occasions (and from the start) that the goal is to break even on it. It's viewed as something to keep the subscribers happy, support for people who need adapters or remotes or whatever.

TiVo hardware is another big example. TiVo has said that the goal is to break even on hardware. They've never succeeded at that, but it's their current goal. They have said they never want to make money overall because of hardware. Their service is what they profit on.

If you're TiVo, and something you hear from potential customers is that a major advantage of the competition (cable providers) is that if the DVR breaks, it gets replaced for free, then you want to address that problem as much as you can.

[jeffw_00]

Guys - the cable companies love to point out that if "their' DVR breaks it will be replaced for free, no questions asked. This is TiVo's answer, plain and simple.

[BobCamp1]

Originally Posted by CrispyCritter

Baloney. TiVo tells its shareholders that lots of its actions are only to break even. The TiVo Store is an example....

TiVo hardware is another big example. TiVo has said that the goal is to break even on hardware. They've never succeeded at that....

The Tivo store earns money -- it charges MSRP. You can find the same units cheaper elsewhere from other retailers -- and in the Tivo Store, Tivo keeps the share it would normally give to the retailer.

Tivo can maybe discount the hardware a little because customers are also forced to buy the service to go with it. So that is a bundle, and there is still a direct way to calculate the profit per each unit sold. If Tivo sales go up x% next year, how much of that was due to the extended warranty program? There's no real way to know that.

If they truly wanted to compete with the DVR lease agreements (free replacement) everyone else has, they should just include a limited three year warranty with every unit.

OK, I should have said that a PROPERLY-RUN company that consistently turns a good profit doesn't implement anything without it being profitable. I forgot which company I was talking about. Never mind.