Let me get right to it. Apple should buy TiVo, not so much for "synergy or commonalities and fit," but for leverage and outright industry extortion.

When at First You Don't Succeed...
Apple, to its credit, has admitted that Apple TV was a dud. More than that, it basically admitted it bombed because it wasn't giving users the content they wanted in the manner in which they wanted. The newly announced Apple TV, take two, fixes a lot of these problems. The markets and analysts have responded, generally, with disappointment to yesterday's Macworld announcements, which just goes to show just how much the markets do not "get" Apple.

The reaction was the same for the original iPod. It also shows that the "analysts" that cover Apple are about as sharp and insightful as a wet sack full of retarded, mercury-poisoned and in-heat platypuses. Honestly, how analysts can so consistently be off by 20-30 or more percent on their estimates for Apple, and not laughed at as complete jokes is beyond me; but I digress. Apple TV take two will be a success. And an important one.

The question is, how big a success and how much of a contributor to Apple's bottom line will it be? Will it become a fourth leg to Apple's business—complementing its computer, iPod, and phone businesses? As it stands right now, it has a fair chance of being like iTunes downloads, pretty successful, but a relatively marginal profit center as compared to its other businesses.

For Now Apple TV is a Supporting Actor
That's because right now, Apple TV is poised to become a great complementary and optional device for TV viewing. It's not essential. I think the movie companies get this too, and its likely why they "gave in" to the peculiar DRM terms announced at Macworld (e.g., HD downloads to Apple TV itself but not to your computer); terms that scream "you're not the driver of the TV experience, you're just a passenger."

Don't get me wrong, Apple TV is a great complementary device. This is particularly true if you have a TiVo series 3 model, which is hampered with cable cards that communicate only one-way, rendering it unable to do on-demand transactions with your cable company. The Apple TV acts as a great stop-gap and I now plan on getting one (although annoyingly, you'll have to jump between your TV inputs to go from your TiVo to the Apple TV and back).

But live TV and TiVo are still the center of the TV experience, and will be for the foreseeable future. Now, I may agree that a totally a-la-carte, on-demand, IP-TV type of device and service may be the future (particularly if it's a Netflix-like model where you pay a set monthly fee for all-you-can-eat content). But make no mistake, that future is a bit off. For now, the Apple TV, as a central/sole device, is a concept that is a bit ahead of its time (save for some early adopters).

Hard Ball with TiVo
So by now you're saying, "Get to the point, why should Apple buy TiVo?" and you're likely expecting to hear how Apple could combine both the TiVo model and their Apple TV into one über device to rule them all (no more TV input jumping). Afterall, TiVo-like ability to record shows would be attractive to consumers as yet another source to fill their Apple TV's with content. That's nice and all, but not where I think the value is.

The value to Apple of having a device like that is saying to a broadcaster, oh for hypothetical purposes, NBC, "Um, you don't want us to use your stuff on iTunes, I see. Hey, how about this. We flip the bit so every Apple TV with built-in TiVo now automatically records a season pass for every NBC show. By default. Tomorrow. How do you like them Apples?"

Now that's leverage. Anti-competitive? Perhaps, but Apple has a lot of arguments to make that it's not a monopoly and therefore free to make terms as it sees fit. Not to mention, our DoJ has proven itself to be the limpest noodle on the planet when it comes to dealing with monopolies. Besides, just the threat should be enough to get everyone playing ball.

But wait, there's more. TiVo comes with a sweet patent portfolio. That would make Apple a juggernaut in the space. With its patent portfolio, and if Apple really wanted to play hard ball, it could basically make a play to "convince" many cable companies to stop making DVRs. With that kind of leverage, Apple could become central to the TV experience. It could make Apple the on-demand player. Now we're talking serious revenue for the bottom line. Better still, the cost of acquiring TiVo is a mere round-off error in Apple's cash reserves.

Of course, if I were a cable company, NBC or Microsoft, I would want to do the exact same thing. Buy TiVo for leverage to control the TV industry. With TiVo's attractive market cap and relatively lame income stream, it seems likely someone will buy it sooner or later. The real question is, who will have the vision and nerve first.