After some rough going recently, things are looking up for TiVo Inc., the video recorder pioneer.

The Alviso company, which lost subscribers during the second quarter of this year and posted a $17.7 million loss after its first profitable quarter, can feel good about a long-awaited software deployment with Comcast Corp. and a patent fight that appears to be tilting in its favor.

The most recent news was that Comcast, the largest cable provider in the country, said this week it is starting to roll out set-top boxes that support TiVo’s software. The service will start in New England in the coming months before moving to other areas. Comcast officials had no timetable for when it will begin offering TiVo-enabled DVRs in the Bay Area.

Although the rollout will not be quick, analysts said the development is good news for TiVo, helping it reach out to Comcast’s 24 million subscribers. TiVo, whose pioneering work in the field helped make its name synonymous with the idea of pausing and recording live television, has had its share of difficulty selling its set-top boxes and subscription services on its own.

The company boasts 4.2 million subscribers, but more than 60 percent of them come through a deal with satellite television operator DirecTV, which sells TiVo’s set-top boxes. But now that DirecTV is selling a competing DVR alongside the TiVo boxes, DirecTV subscribers have been dropping their TiVo service.

Selling its software through Comcast and Cox Cable, which also has signed a deal to sell TiVo-enabled DVRs, should help TiVo add to its subscriber base again.

“This is a big deal because of the numbers,” said Van Baker, an analyst with Gartner. “In order for TiVo to realize its vision, it needs a big enough installed base to matter.”

Baker said if TiVo can get big enough, it can start to offer targeted advertising within shows that cater to their subscribers’ preferences, an attractive draw for advertisers. He said the only question is how much Comcast will promote the TiVo-enabled DVRs alongside their own DVR offerings.

In a larger sense, the Comcast deal underscores TiVo’s transition away from being a hardware-maker to being a pure software provider. Currently, TiVo sells its own set-top boxes for $99, $299 and $599. While TiVo’s boxes have been well received by users, it has had a hard time competing with cable companies, which lease DVRs to its subscribers.

By offering software that can be downloaded into existing Comcast set-top boxes, TiVo can get out of the hardware game, which is dominated by heavyweights Motorola Inc. and Cisco Systems Inc., which owns Scientific Atlanta.

“Consumers are now ingrained with the idea they get a DVR for free. But with TiVo, it’s pay up front and then $12 to $15 month,” said Jeff Schreiner, an analyst with American Technology Research. “This new model fits TiVo better because they don’t have to sell the hardware to the individual to get them to use the product.”

The other good news is the continuing patent battle with satellite television provider EchoStar Communications Corp. TiVo originally sued EchoStar for patent infringement in 2004 and won an $89.6 million judgment last year. In oral arguments last week in EchoStar’s appeal, a three-judge panel seemed to suggest it would rule at least partially in favor of TiVo.

A final decision is not expected for several months and could still be appealed to the Supreme Court. But analysts say TiVo is in a good position to win and reap a potential windfall, depending on the extent of the court’s ruling.

If all goes TiVo’s way, it could take in money from EchoStar and also go after other DVR-makers, demanding licensing fees for its technology. Or it could go straight to other television providers who sell DVRs and secure deals for its TiVo software.

“If they win it, this could be really big for TiVo,” said Kunal Madhukar, an analyst with Bear Stearns & Co. “The EchoStar settlement alone could mean 5 to 6 dollars more per share.”

E-mail Ryan Kim at rkim@sfchronicle.com.

WENDY Alexander will be the next leader of the Labour party at Holyrood.

Nominations to replace Jack McConnell, the former First Minster, closed at noon today and sources close to Ms Alexander confirmed to Scotsman.com that she was the only MSP to put her name forward.

A formal announcement from Scottish Labour is expected shortly.

The 44-year-old former minister for enterprise will formally be confirmed next month as Labour’s leader in the Scottish parliament.

But her “coronation” became a reality today after the failure of the left-wing of the party to find the minimum six members of the Scottish parliament needed to nominate a challenger.

Ms Alexander was not immediately available to comment but will be speaking in Stirling this afternoon further to outline her ideas to revitalise Labour in the wake of the SNP’s one seat victory in May’s Holyrood elections.

She is also planning to set out her stall to party faithful at meetings around Scotland, ahead of being installed as “leader of Labour in the Scottish Parliament,” the roles formal title.

Any leadership candidate needs a minimum of five other MSPs from Labour 46-strong Holyrood group to support them, and the left-wing Campaign for Socialism was only able to muster four names in total.

The leadership contest was prompted by last weeks decision by Jack McConnell, Labours third leader in Scotland since 1999, to stand down with immediate effect, although he remains an MSP.

His move came in the wake of Labours election defeat at the hands of the SNP whose leader, Alex Salmond, who has been First Minister for nearly 100 days.

Ms Alexander, 44, the sister of Westminster minister Douglas Alexander, the Secretary of State for International Development. She will be the Scottish partys first woman leader.

Like her brother, she is a close ally of Prime Minister Gordon Brown, who is understood to have supported her bid to succeed Mr McConnell.

Ms Alexander is fiercely intelligent and regarded as one of Scotlands brightest politicians but some question how well she can communicate with voters and whether she will be a match for Mr Salmond’s debating skills.

She has already served notice of her intention to reform the party and has said Labour should take part in any debate on Scotlands constitutional future.

However, this appeared to put her at odds with Scottish Secretary Des Browne. He told The Scotsman earlier this week that the current devolution settlement met Scotlands needs.

Ms Alexander said this week that Prime Minister Gordon Brown had already launched a constitutional debate and Scotland should be part of that.

“The issue thats dominating Scottish politics is between those of us who want to make the UK work better and those who simply want to exit it altogether,” she told BBC radios The World at One yesterday.

“That of course is the position Alex Salmond is in and thats the ground on which we need to contest and say the people of Scotland are not with you on wanting to leave the United Kingdom and we are going to be the ones who speak up for their priorities,” she said.

Semiconductor sales are at their highest level this year. The question is, will it last?

Global chip sales jumped 4.9% in August over the same month a year ago to hit $21.6 billion, the best monthly rise since January.

That’s a welcome change from the last 12 months or so, when a combination of slow sales and an oversupply of chips kept prices and profits down.

“I’m encouraged by what we see in the August numbers,” said George Scalise, president of the Semiconductor Industry Association, the biggest chip trade group.

Scalise says sales in the top two chip markets, personal computers and cell phones, are strong. Analysts see PC sales growing 13% this year to about 275 million units, and cell phones growing 10% to 1.1 billion units.

But with the overall economy slowing, chip industry executives worry that a recession could knock chip sales down just when they’re getting up again.

One bright spot: Nand-type flash memory chips. The technology, which gets its name from a computer logic term, is widely used in cell phones and digital music players. Now it’s starting to go into PCs as well. Nand sales in August were up 72%, year over year, to $1.58 billion, the SIA says.

1. Business

The 50-year-old industry is maturing. Until the late 1990s, chip sales rose about 17% or 18% a year. Today, the figure is closer to 6%.

With sales of almost $248 billion in 2006, it’s hard to be a growth industry, Scalise says. The SIA forecasts chip sales will grow an average of 5.4% a year between now and 2010.

Semiconductors are an international business. Most chipmakers are based in the U.S. and design their chips domestically.

But about 70% of chips are manufactured overseas, mostly in China and other countries in Southeast Asia.

With growing middle classes in China, India and other populous, emerging nations, more goods are sold in those areas than before.

The U.S. is still the leader in chips. But some industry observers worry that Chinese and Indian engineers will develop their chipmaking skills. Home-grown startups in those countries could cut into sales of American and European firms.

Name Of The Game: Innovation is key. Chips are complex, and features on chips continue to shrink toward the ultra-tiny, nanometer proportions. That’s a high barrier to entry. Those that excel at chip design and the processes to make them will win.

2. Market

If you plug it in or put batteries in it, there is a good chance that the device you use has a microchip somewhere inside. In addition to high-tech gizmos such as cell phones, digital cameras and personal music players, semiconductors are showing up on ordinary household appliances, autos, thermostats and toys.

Even old-fashioned greeting cards contain tiny chips that play sound clips from popular movies and TV shows or your own recorded greeting.

Consumer electronics account for about 60% of all chip sales. That’s a shift from previous years when business, not consumers, dominated. Consumer devices accounted for less than half of chip sales until the early 2000s.

SIA’s Scalise says the trend toward consumers is going to get stronger in the years ahead.

3. Climate

At the beginning of this year, the SIA forecast 2007 sales would rise 10% over 2006’s $247.7 billion. But after sales rose a measly 2.1% in the first half, the group cut its forecast to 1.8% for the year.

Still, August’s almost 5% jump points to encouraging holiday sales. Chip companies typically make more than half of their annual revenue in the fourth quarter.

The chip industry looks like it is recovering from its slump, and flash memory chips are leading the way.

“Flash is the hottest segment of the chip market,” In-Stat analyst Jim McGregor said. “With the growth of consumer devices and mobile computing, you can’t say enough about flash.” That could mean stronger sales for flash maker Sandisk () and Micron Technology, () the biggest U.S. memory maker.

Device makers prize flash chips because they store data even after users turn off their PC or gadget.

That has made possible things such as digital cameras and digital music players the size of chewing gum. Nand has become the most widely used type of flash memory.

George Burns, an analyst at Strategic Marketing Associates, says newer products like the Apple () iPhone are giving flash chip sales a boost.

He cited Toshiba’s $3 billion joint venture with Sandisk for a flash memory factory, the biggest in the world.

“They’re turning away customers now,” he said. “There’s big demand for flash.”

Newer PCs are increasingly equipped with hybrid hard drives, which use flash memory to complement traditional magnetic storage. Some PC makers have begun selling so-called solid-state hard drives composed entirely of flash memory.

4. Technology

In the short term, it is business as usual for chipmakers. For four decades, the industry mantra has been smaller, faster, cheaper.

But the industry is running headlong into a big problem.

They’ve now shrunk the features on chips to an ultra-tiny level. Today’s state of the art is metal circuitry 45 nanometers wide. That’s just a few hundred atoms wide.

Chipmakers can’t go much smaller than that, because electricity acts differently with wires that tiny. Power begins to jump around, making stable, predictable designs all but impossible.

Heat is another big issue. Today’s chips comprise many millions of transistors, sucking up more power. Virtually all of that energy ends up as heat

Chip and system makers have been scrambling to find new ways to boost chip performance while keeping power use down.

One way is by shrinking the design of the chip’s core its “brains” to boost efficiency. Another approach involves putting two or more cores on a single chip. By working in tandem, the core boost performance without a huge increase in power usage.

Intel, () IBM, () Advanced Micro Devices () and others today have two or more cores on some of their processors. They plan to keep adding more.

5. Outlook

Analysts are confident that if the overall economy holds up, chip sales should show a slight rebound for the rest of the year. Next year should be even better, although not dramatically so.

Market tracker iSuppli forecasts 3.5% growth this year and 9.3% next year. Gartner Dataquest expects chip sales will rise 5% this year and in the high single digits to low double digits in 2008.

The SIA will unveil its forecast for 2008 in November.

Upside: Flash chips and microprocessors sales should remain strong.

Risks: In addition to the risk of recession, demand continues to be volatile. So there always is a possibility of a supply glut, driving down chip prices and cutting into industry profits.