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As long as there have been TV set-top boxes, users have clamored for Apple to create one.

Almost 15 years ago, Apple did design an Apple Interactive Television Box, but it never emerged from the prototype stage. Ten years ago, a project code-named Columbus was rumored to be a set-top box but turned out to be the iMac; it was hard to be disappointed.

Finally, in 2006 Apple shipped its first set-top box, the Apple TV. After such a long buildup, it was bound to be a disappointment. For $299, it essentially turned your TV into a giant iPod. You had to buy, download, and store everything on your Mac, and then download or stream that content from your Mac to your Apple TV.

It's hard to believe that Apple really expected such a product to catch on. Perhaps the company never really did: Last year, Steve Jobs called the Apple TV "a hobby"--an uncharacteristically low-key stance for a CEO so focused on hit products.

Then, at Macworld Expo 2008, Apple announced the Apple TV "Take 2." With it, customers could now purchase or rent movies from the comfort of their couch, downloading everything directly to their Apple TV.

But the Apple TV still hasn't become an iPod-like megahit. It's surprising: How could a company as astute as Apple fail twice at creating the set-top box its customers want?

The TiVo Factor

I don't think there's really any mystery here. When it comes to set-top boxes, there's one word on the lips of everyone in Apple's target market. But you won't hear Apple mention it.

That word is TiVo, the preeminent maker of digital video recorders (DVRs). TiVo has single-handedly defined the DVR experience for millions of consumers. It's now impossible to expect a set-top box without DVR functionality--such as the first two generations of the Apple TV--to succeed in the marketplace.

Given the success of its product, you'd think TiVo would be riding high. But in fact, the company has been battered since its inception. Not by customers, mind you, but by the entertainment industry itself, which believes it has a vested interest in preventing its customers from using the features that a DVR can provide.

The classic example is the ability to automatically skip commercials. That feature is technically feasible and universally desired, yet it remains unavailable in TiVo's products. You can fast-forward through ads on a TiVo. But the ability to leap ahead 30 seconds at a time (as you could on other DVRs) is hidden by default, and there are no automated ad-detection or ad-skipping features.

ReplayTV, a competing DVR maker, dared to include ad skipping as one of its features and was sued by a group of TV and movie studios in 2001. Largely because of legal expenses, the company went bankrupt two years later. Meanwhile, the TiVo bowed to industry pressure and went on to dominate the DVR market.

This stifling atmosphere continues to hamstring TiVo's products. The TiVo user interface has become saturated with logos and other paid advertisements, while features that consumers really want aren't implemented. And truth be told, TiVo's hardware and software have never had the polish or pizzazz of Apple's. That's why there remains a fervent desire--at least among Apple's customers--for the Apple TV to become an Apple TiVo.

Apple could succeed where TiVo has failed. In addition to its technology and design prowess, Apple has shown that it's willing and able to take on the powers that be. With the iPod and iTunes, the company dragged the giants of the entertainment industry kicking and screaming into the modern age. With the iPhone, it reversed the balance of power between mobile phone carriers and handset makers. Where TiVo bowed to industry pressure and compromised its products, Apple could fight and win.

If Apple wants its "hobby" product line to take off like the iPod, it has to acknowledge the hole in the Apple TV's functionality and create a real DVR. A decade ago, it would have seemed suicidal for any technology company, let alone Apple, to take on the cable, TV, and movie industries. Today, the success of the Apple TV, and perhaps the future of the DVR itself, depends on it.

[John Siracusa is a columnist for Ars Technica.]

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