Apple and Sirius XM Partnership: Combined Strengths Too Big to Ignore 31 comments
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by Demian Russian
The potential synergies between Sirius XM (SIRI) and Apple (AAPL) are now becoming too big to ignore. Both companies have huge strengths to offer each other, particularly where they both have marked weakness. The iPod has 70% market share in the MP3 player market (according to the most recent NPD data) and Apple's iTunes is by far the number one source for online music delivery, but both are lacking live content and an effective means of music discovery.
Sirius XM has been hugely popular with those that grew up with and have a thirst for the golden age of radio, but has yet to penetrate the younger tech-oriented generation. Apple's strong relationship with this tech-engulfed demographic makes it an ideal partner. Likewise, Sirius XM could provide the missing link in Apple's music business with sorely needed live content and music discovery.
The potential impact of the looming Q2 release of the Sirius XM iPhone/iPod Touch app should not be underestimated. Think of it as Sirius XM getting into the dash of a new OEM partner - minus the normally related radio subsidy and revenue sharing costs. That's where the similarities end. What OEM sold 13.7 million of one of its models last year? Analysts are looking for as little as 9 million total autos sold in the US this year. Apple sold those 13.7 million iPhones in 2008 and there are now over 37 million iPhones/iPod Touches out on the street.
With the iPhone now available in 81 countries, the coming 3.0 software update and a new iPhone release anticipated, there appears to be no stopping its continued growth. Sirius XM's live content could wake up all of those iPhones and iPod Touches out on the street and turn them into the new transistor radios of this generation. There have now been over 1 billion iPhone/iPod Touch app downloads in the months since Apple opened its iTunes app store. Sirius XM will get much exposure from its free to download app being available through iTunes, but what about breaking into the iTunes dashboard?
This could be a huge win for both companies. What if iTunes visitors could subscribe to and stream Sirius XM right through the iTunes platform? What if when they heard a song they liked, a single click could purchase that song? The ability to stream Sirius XM through iTunes would drive customer traffic there -- and not just any kind of customers, but the kind of customers that linger around the store until they find something they like, the kind of customers that keep coming back day after day. Sirius XM would add the kind of music discovery to iTunes that you just can't get with 30-second song samples. Apple's combination of marketing prowess and large engaged user base would be a huge asset in Sirius XM's future subscriber growth.
What about hardware? While the new Pioneer XMP3 portable satellite radio is a technological wonder, allowing users to record up to five channels at once, can you imagine how popular a portable satellite radio designed and marketed by Apple could be? What about an in-dash Sirius XM radio designed and marketed by Apple? There is an old joke that people will buy anything if it's shiny and says "Apple" on it. While there may be some truth to that, Apple does have a strong history of building innovative products that its customers flock to.
Would Apple ever make a play to acquire Sirius XM? It certainly has the cash -- to the tune of over $25 billion in the bank. While Apple does have a long history of buying companies that it can easily integrate into its hardware and software businesses, a potential acquisition of Sirius XM gets complicated and brings up many questions. With Liberty Media (LINTA) now owning a 40% stake in the company and Sirius XM just recently putting a "poison pill" in place, would the roadblocks be too big?
Since the iPod's popularity was brought up as one of the main arguments for allowing the merger of Sirius and XM, there would certainly be eyebrows raised at the DOJ and the FCC, but there would also be legitimate arguments that it would be in the best interest of the consumer. While both companies are in the business of music delivery, their business models are completely different. Sirius XM and Apple have so much to offer each other. Rather than compete with each other, they can use their individual strengths to complement and coexist with one other.
Why has the Sirius XM iPhone/iPod Touch app taken so long to be released? Has there been a bigger partnership with Apple in the works? Way back in an April 2005 interview, Sirius XM CEO Mel Karmazin, stated: "One day maybe iPod will be interested in putting in satellite radio." That day is upon us.
Disclosure: Long SIRI.
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On May 11 07:13 AM FloorHomo wrote:
>
Having said that it doesn't sound like a great fit for Apple.
Another problem for companies like this is that IP-networks are open. Which means that eventually I can put everything through one connection instead of needing to pay for ten of them. We see this with TV content that is going to many over the Internet to their PC or iPod. Live programming is available via streaming.
Let's assume that mainstream Western consumers will continue to be willing to pay *both* $100/month or so for a home broadband connection linked to a set-top box or equivalent and about $100/month for a mobile broadband service linked to an iPhone or equivalent. Then they are going to amortize those fixed monthly costs as much as possible. They will get "radio" equivalents over these connections but getting them to pay a separate fee for it isn't obvious.
I think a great channel would be a live concert channel of bands and artist currently on tour. People would pay a fee for that. I would!
On May 11 07:13 AM FloorHomo wrote:
>
clearly a partnership between the 2 co's benifets both but apple buying siri ha! why in there right mind would they want to do that?
On May 11 09:39 AM User 330908 wrote:
> 20 million subscribers and you say no one will pay to listen to radio.
> Are you living under a rock! Step away from the crack pipe!
18 million and DECREASING subscribers. and of those
over half got a subscription FREE with their new car purchase.
Buying stock doesn't mean stop thinking and start insulting.
If you would do any thinking BEFORE you buy a stock , you wouldnt have to be here defending your stupid buy.
PEOPLE DON'T WANT IT.
LET THAT SINK IN
LET THAT SINK INTO YOUR HEADS
What channel is CNBC and bloomberg on Pandora?
In fact, what live content channels at all does Pandora boast?
On May 11 10:03 AM SanDiegoSailor wrote:
> Ever heard of Pandora? It's already free on the iPhone and I listen
> to it my car all the time. This plus HD Radio in my new BMW, great
> sound on both AM and FM with local content. When the trial subscription
> on my new car ran out, SeriusXM tried to charge me $12.95/month for
> that car since my other two cars are on XM. Believe it or not they
> tried to treat me like I wasn't already a customer with the lame
> excuse that "we haven't combined the accounts yet", when I said "Ok,
> I understand that you haven't done it yet, I'd be ok with having
> two accounts for awhile, but need you to charge me the $6.95 I'd
> pay on my XM family plan". When they said they wouldn't do that,
> I said ok never mind and began looking at alternatives. I am very
> happy with HD radio and Pandora so am now looking at canceling my
> XM account completely. I will not be a customer of a company that
> doesn't treat me like a valued customer. They can do without my
> $27/month. Good luck.
Millions of cars and homes have satellite ready receivers, but there is no point in having it. Most vehicular users don't drive far enough to need it and most home users can use internet radio with thousands of stations. Satellite radio is next to useless. Now maybe if those satellites mostly used for transmitting some decent form of video (Backseat TV). But devices would still need to use a proprietary chip to receive that data and I'm sure the signal would be flaky at best for handheld device users.
Apple doesn't even believe in putting FM radio circuitry in their products so forget about them putting some satellite chip in their products. Apple won't touch Sirius XM Radio. They just don't need a venture that been losing money for years and years with no end in sight.
I've read a little bit about the technology and it's somewhat impressive, but I just can't imagine how Apple would go about convincing users that this is something they need and turn it into a money-making venture. Turn it into a hobby like Apple TV? That's what Apple calls products that they can't sell.
On May 11 10:59 AM Brandon Matthews wrote:
> Really? What channels on Pandora get Stern, Martha, Oprah, Opie and
> Anthony, Every NFL, NHL, MLB,NBA and PGA games>
>
> What channel is CNBC and bloomberg on Pandora?
>
> In fact, what live content channels at all does Pandora boast?<br/>
Those are ALL COMMERCIAL channels.
Why would people want to PAY also?
answer; They dont.
Those are ALL COMMERCIAL channels.
Why would people want to PAY also?
answer; They dont.
You know, you "internet radio will kill SiriusXM" people always fail to realize that thus far, internet radio is getting of oh so cheap when it comes to subsidizing the music industry. Terrestrial radio has 22 minutes on average of commercials NOW, and they don't pay a penny to the artists who make the music.
I have seen IRAA subsidies mentioned multiple times in these comments, yet BChargers seems to miss them every time, because you certainly do not address it. What happens when Pandora and Slacker have to start paying? Oh yeah, that is right, Slacker has already said that it would basically have to go out of business if the music industry raised its rates... How silly of me to forget that quote.
With our wanderful government, free music is DEAD. Terrestrial will be forced to pay, and so will internet radio. JUST LIKE SIRIUS XM HAS DONE FOR YEARS ALREADY. Address THAT fact Chargers...
On May 11 02:21 PM *Newman* wrote:
> With our wanderful government, free music is DEAD. Terrestrial will
> be forced to pay, and so will internet radio. JUST LIKE SIRIUS XM
> HAS DONE FOR YEARS ALREADY. Address THAT fact Chargers...
OK
Like every other person that thinks paying for farts is a good "investment" you are wrong. Period. Flat out wrong.
Further as Brandon above pointed out, only non subscribers of satellite radio content would thing that Pandora and Slacker are a true apples to apples competitor.... not even close.....
On May 11 04:26 PM Charlie P wrote:
> There is a significant technical issue that makes an Apple / Sirius
> XM relationship unlikely. Apple IPod and I Phone usere would only
> be able to access the Sirius signal out of doors, and those divices
> would have to be equiped with some type of antenna. Communicating
> with a satilite reguires line of sight to the satilite. The 13 million
> IPods out there are simply not equiped to receive a satilite signal.
> If you have XM or Sirius now you have an antenna, its on you car
> or attached to the radio in your home.
On May 11 07:13 AM User 368600 wrote:
>