Not the most aggressive price considering that Amazon (AMZN) is currently offering the Pre, the Pixi’s elder, more robust sibling, for $99 (see image below; click to enlarge) with a two-year contract as well. Remember, the Pixi has a slower processor and a smaller screen than the Pre. And it doesn’t support Wi-Fi. Has some neat back covers though!

Worse, Pixi requires $200 to get out the door, and statistically speaking, there will be quite a few people who will fail to cash in that second $100 rebate. As I noted back when the Pre launched with a similar rebate program, redemption rates for offers like these typically run around 58 percent, thanks to customers who either find the process too cumbersome or forget about it entirely.

This can end up being quite lucrative for the issuing company. Consider this: In 2004, TiVo (TIVO) promised customers a $100 mail-in rebate within six to eight weeks of the purchase of a new DVR. About 50,000 of the 104,000 eligible for that offer failed to take advantage of it. That saved TiVo about $5 million.

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• Palm Pre: $199 After a $100 Rebate We Hope You Lose

You see, DISH, though it had been barred from shipping DVRs with the patent-infringing functionality, continued to do so, justifying its behavior by claiming it had implemented a noninfringing workaround. But in June of this year, a court found that not to be the case. The court again reprimanded EchoStar (SATS) and ordered the company to pay TiVo (TIVO) $103 million in additional fines for the violations that occurred during the time in which the “workaround” was implemented. And now, it has added another $200 million to that.

TiVo, as one might imagine, was overjoyed by the ruling, which leaves open the possibility of further sanctions if EchoStar does not abide by the injunction.

“We are pleased by the Court’s ruling to impose contempt sanctions of approximately $200 million against EchoStar for its continued violation of a Court-ordered permanent injunction, and to award TiVo its attorney fees and costs incurred during the contempt proceedings,” the company said in a statement. “This brings total damages and sanctions in this case to approximately $400 million through July 1, 2009, plus attorney fees, and is exclusive of potential further damages and sanctions. Additionally, we are pleased that the Court ‘will seriously entertain the award of enhanced sanctions’ if ‘EchoStar is unsuccessful on appeal and nevertheless continues to disregard this Court’s orders.’”

Who knows, if DISH keeps it up, TiVo may get that $974.5 million yet.

TiVo’s (TIVO) complaint seeks both damages for past infringement and a permanent injunction–similar to the one it won against satellite provider Dish Network (DISH)–that would force AT&T (T) and Verizon (VZ) to shut down their DVR services.

“Attempts were made to reach a commercial arrangement,” TiVo CEO Tom Rogers said during an earnings call today. “They were not reached. We believe we are being caused irreparable harm and that harm increases everyday this doesn’t cease. We have found ourselves in a similar situation with AT&T and Verizon. We need to stop their continued unauthorized use of our intellectual property.”

And, God willing, corral them into that commercial arrangement to which Rogers refers. After all, the company lost 146,000 subscribers in its second quarter. It desperately needs to do something to win new ones and lower its churn.

[Image credit: Flickr/montevino]

“[The Pre is ] extremely competitively priced.”

– Sprint exec. Kevin Packingham

The great truism about rebates is that anything less than 100 percent redemption is free money for the companies offering them. That’s something Palm and Sprint are clearly counting on as they bring Palm’s new Pre handset to market with a $100 rebate.

The companies tout the Pre’s selling price as $199, but really that’s a bit disingenuous. If you intend to buy one, you still have to walk into the store with $299. Sure, you’ll be given that rebate, but Palm (PALM) and Sprint (S) are both hoping you won’t use it. And statistically speaking, you may not. Sahir Anand, Research Director at Aberdeen Group, says rebate redemption rates among the 175 organizations he recently surveyed were just 58 percent. Customers who failed to submit their rebates either found them too cumbersome or simply forgot about them. And that can end up being quite profitable for the companies that issue them. Consider this: In 2004, TiVo (TIVO) promised customers a $100 mail-in rebate within six to eight weeks of the purchase of a new DVR. About 50,000 of the 104,000 eligible for that offer failed to take advantage of it. That saved TiVo about $5 million.

How much might Palm and Sprint save on the Pre rebate program? It’s impossible to say with any degree of specificity, but certainly enough to raise the average selling price of the device above $199. Perhaps even well above it, if Aberdeen’s metrics are borne out.

“We do not intend to file for bankruptcy….We have lots of plans to grow our business.”

– Blockbuster spokesperson Karen Raskopf, March 3, 2009

Blockbuster in a Monday filing told the Securities and Exchange Commission what anyone who’s observed its fast-declining fortunes has known for some time now: The company isn’t sure it can stay in business much longer. In a PricewaterhouseCoopers assessment included as part of its latest 10-K, Blockbuster (BBI) acknowledged that its financial situation raises “substantial doubt about the Company’s ability to continue as a going concern” and said it may have to close its doors if its financial situation doesn’t improve in the near future. Seems that $250 million revolving loan Blockbuster announced last week is conditional, and the video rental chain says there is “no assurance” that it can meet its requirements.

An unfortunate turn of events for Blockbuster, but far from an unexpected one. The company did not fare well in its battle against DVD-by-mail pioneer Netflix (NFLX), and its recent efforts to stay relevant have been head-shakers at best. A $1.3 billion gambit for an electronics chain that would go bankrupt less than a year later? A weak (and costly) set-top box offering that would later be made redundant by a deal with TiVo (TIVO)? A vending-machine program with partner NCR (NCR) that, like its entry into the DVD-by-mail market is late to a game it’s already losing? And all these things conceived and launched amid a challenging macroeconomic environment and constrained capital markets. Sad, really. Hard to imagine that 10 years ago Reed Hastings was doing all that he could to convince Blockbuster to buy Netflix…

If inking a video-on-demand deal with a declining DVR pioneer is one of them… well, that’s not much of a plan, is it? But when your financial statements look like Blockbuster’s, I suppose you cling to life however you can (Blockbuster shares have fallen about 80 percent over the last 12 months). And so, beginning in the second half of 2009, the company will make its Blockbuster On Demand service available to TiVo subscribers. The agreement also calls for Blockbuster’s brick-and-mortar stores to sell TiVo DVRs. “We are excited to be teaming with TiVo, the company that created the DVR, to make Blockbuster’s entertainment content readily available to their millions of subscribers,” said Blockbuster CEO Jim Keyes. “Ultimately, our vision is to work with TiVo so that their subscribers can access movies not only through our On Demand service but also from our stores and through our by-mail service as well.”

For Blockbuster (BBI), the deal is a means of capitalizing on the rising popularity of on-demand video. But to really do that effectively, the company needs alliances with more electronics manufacturers than just TiVo (TIVO). After all, the DVR pioneer isn’t in the greatest of health these days. And Netflix (NLFX) already delivers online video to TiVo and PCs, Macs, Xbox 360s, and selected LG and Samsung Blu-ray players as well. Clearly, Blockbuster is as late to on-demand as it was to DVD-by-mail.

Why the sudden interest in a renewed partnership? Could be the recent change in management at DirecTV, which was taken over by Liberty Media (LINTA) in an $11 billion asset swap with News Corp. (NWS) (News Corp. is the owner of Dow Jones and of this Web site). Or could it be that DirecTV simply saw the writing on the wall after TiVo successfully sued Dish for infringing on its patented time-warp technology?

Perhaps a little of both, hmm?

Lest there be any doubt that DVR functionality was purposefully left out of Apple TV, consider this patent recently unearthed by AppleInsider. Filed in October of 2006, the patent describes not just a version of Apple TV capable of browsing and recording live TV programming, but a touch-based remote that could be preloaded with upcoming TV listings to facilitate it. From the patent:

For example, program data for upcoming programs, e.g., for the next month, can be downloaded and stored on the remote control device. Thereafter, a user of the remote control device can search programs that are to be broadcast and determine which programs to record. The recording settings can be programmed onto the remote control device, and then be provided to the video device when a data communication is established between the remote control device and the video device.”

Pretty slick, eh? Lots of additional possibilities here as well. One could easily imagine the iPod Touch and iPhone serving as the remote the patent describes. And if this next-generation Apple TV is capable of recording TV programming, why not make it the gateway through which such programming is delivered? How nice would it be to subscribe to HBO–and HBO alone–via iTunes? How nice would it be to subscribe to a season of “Weeds”? Or to a commercial-free season of “The Office” and skip everything else NBC has to offer? How nice would it be if the latest unwatched episode of “Weeds” on your Apple TV was automatically synced to your iPhone for later viewing? How nice would it be if new films opened on iTunes the same day they opened in theaters?

Pipe dream? Perhaps. Certainly, these scenarios would require Apple (AAPL) to ink some fantastical new licensing deals with Hollywood. And the two aren’t exactly seeing eye-to-eye all the time these days. Still, you never know. Stranger things have happened.

I’m not so sure that the whole issue really is one of commercial avoidance. It really is a matter of convenience–so you don’t miss your favorite show. And quite frankly, we’re just training a new generation of viewers to skip commercials because they can. I’m not sure that the driving reason to get a DVR in the first place is just to skip commercials. I don’t fundamentally believe that. People can understand in order to have convenience and on-demand [options], that you can’t skip commercials.”

–ABC President of Advertising Sales Mike Shaw, July 2006

Leave it to ABC to devise a service that offers all the convenience of video-on-demand with all the annoyance and vapidity of broadcast TV in one joyless package. This morning the network and its affiliates announced fast-forward-disabled video on demand, which prevents viewers from bypassing commercials.

Designed to combat the now nearly ubiquitous DVR, the service offers viewers the chance to watch ABC shows like “Lost” and “Desperate Housewives” for free, at any time they choose, as long as they’re willing to suffer through the advertisements that accompany them. And just to make sure that they do, participating affiliates will disable their video-on-demand services’ fast-forwarding capability. “This does counter the DVR,” Anne Sweeney, the president of the Disney-ABC television group (DIS), told the New York Times. “You don’t need TiVo if you have fast-forward-disabled video on demand. It gives you the same opportunity to catch up to your favorite shows.”

And your not-so-favorite commercials. Which would seem to make it about as uncompelling a proposition as … well, as over-the-air broadcast TV. But ABC, which has been testing the service with Cox Communications in Orange County, Calif., insists it’s got an audience. The company says 93% of users it surveyed said they would be willing to give up the fast-forwarding option and watch the commercials if they were given VOD programming for free.

So perhaps the 30-second TV ad has a few more years left in it still. But only a few. According to a study by the Association of National Advertisers and Forrester Research, 62% of marketers believe TV advertising has become less effective in the past few years. And 87% said they plan to increase their online ad spending this year, while many said they will cut their TV ad buys substantially when DVR penetration tops 50%.

In the past few weeks, TiVo has signed deals with online photo-sharing services Photobucket and Picasa and the music-and-video network Music Choice. It’s begun fulfilling its contracts with cable outfits Comcast and Cox. It’s entered the media-services market, partnering with NBC Universal to provide second-by-second ratings of programs and commercials, based on the TV-watching habits of subscribers to the company’s digital video recorders.

“We are very much a technology company,” TiVo CEO Tom Rogers told the New York Times. “At the same time, in the last year and a half, we’ve substantially moved in the direction of becoming a media company.” And that’s proven a prudent move for TiVo, where things are beginning to look up. Shares of the company hit a 52-week high of $8.53 Friday. Today they were trading at around $8.35.

Too bad for TiVo that days of the standalone digital video recorder are reportedly numbered. According to Yankee Group, the standalone DVR product category will cease to exist by 2010, “and its dissolution will result in the end of TiVo as we know it.”