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Satellite Radio: Coming Soon to…Everywhere

It will be if XM Radio Chairman Gary Parsons has his way. But it’s a long way to the top if they want to get mobile with their rock and roll.
April 1, 2005

Armchair technologists love to predict The Next Big Thing. Getting that right, however, requires a look to the past. Two prevailing technology trends of the last decade that are still influencing trends today are portability and multi-purpose devices.

This week, XM Satellite Radio Chairman Gary Parsons told an audience at a Banc of America Securities investor’s conference in New York City that his company’s future includes delivering its service to a host of gadgets – a move that incorporates both these trends.

“We would see the ability for consumer electronics manufacturers to perpetuate the availability of XM’s service down to clock radios and DVD players,” says Parsons, according to a Reuters report of the meeting.

It’s a pretty compelling scenario, and one that makes sense for XM and its competitor, Sirius Satellite Radio, both of which are in a race to grow their subscriber rolls and subsequent profits. XM Radio currently has 3.2 million subscribers; Sirius 1.2 million. However, neither company is profitable today.

Currently, XM sells a portable satellite radio player, MyFi, that allows subscribers to listen to XM while on the go, but it’s a standalone device. Sirius has no comparable offering at this time, but expects to enter into the mobile market soon.

“We plan to offer a portable, wearable device by the end of the year,” says Jim Collins, spokesperson for Sirius. Collins couldn’t speak specifically to Sirius’s plans for device compatibility, but says “What Mr. Parsons was saying is something that’s of interest to us as well. We’re both exploring this.”

So what would happen if a satellite radio option started popping up on DVD players and cell phones? The inclusion of satellite radio capabilities onto portable devices would likely spur subscriber growth for the satellite radio industry, and may alter consumer purchasing behavior with regards to digital music downloads.

Here’s one shakeup scenario: If consumers could get satellite radio on an MP3 player, the argument goes, would they download fewer songs? And if satellite radio were available as an additional feature on MP3 players, cell phones, DVD players, and other devices, would people be more likely to subscribe to the service?

Based on the responses from analysts and manufacturers interviewed for this article, the prevailing answers are yes and yes.

But people shouldn’t hold off on buying a digital music player or cell phone to wait for satellite radio capabilities – it’s a long ways coming, with significant technological hurdles remaining. What’s more, the satellite industry has yet to convince the various gadget makers that it’s in their best interest to add the feature.

“From the point of view of manufacturers, it’s not such a valuable proposition for them,” says Phil Leigh, principal analyst with Inside Digital Media. “For three reasons: It costs money, it’s of limited usability to the consumer, and it means the consumer will pay an additional incremental fee.”

According to Phil O’Shaughnessy, a spokesperson for Creative Labs, maker of the Rio MP3 player, including satellite radio is not currently an “area of focus” for Creative. Representatives from Apple and Dell didn’t respond to’s request for comment by press time

In addition to the battle to convince device manufacturers of the economic benefits of including satellite radio, XM and Sirius need to overcome technological impediments. With XM’s MyFi device (manufactured by Delphi), many Internet review sites call attention to the unit’s spotty reception.

The main problem is attributed to the size of the antenna shipped inside the unit, which isn’t strong enough to consistently pick up the signal, according to these reviews. But there is a secondary issue as well. For satellite radio to work, the user must be in a line of sight to the satellites or near a repeater. Portable devices, by their nature, will be move around and that means it’s likely people will find themselves out of satellite sight or repeater vicinity.

Despite these hurdles, the last 10 years of technological innovation proves that people are interested in more features when it comes to gadgetry and media consumption. Look at the runaway success of camera phones, a market that grew 200 percent last year in the United States, or the growing interest in satellite radio. XM Radio had 1.2 million subscribers in 2003; today it has almost three times that. . 

While it’s a foolish bet to think satellite radio everywhere will happen soon, it’s equally questionable to bet against it entirely.

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