Apple, Internet Radio Will Not Cancel Out Satellite Radio

Recently I read an article from a popular technology web site in which the author believes that satellite radio will die this summer, as a result of the iPod and iPhone coming out with a new Broadcom (BRCM) BCM4329 chip that would give them 802.11n wireless capability. This means that you will be able to tune your FM radio to the frequency that the device is broadcasting and listen to online radio and your digital library through your car stereo. That's true. It's a nice feature but it isn't exactly a new idea. So let's talk reality.

Cost. The cost of online streaming an 802.11 iPhone is $30.00 in addition to the standard phone plan which is $100.00 or so. Satellite radio is $12.00.

Buffering. Buffering issues for music streams over 96kps can get to be spotty, especially in a moving vehicle. Let's face it, there are dead spots everywhere. Many internet radio sites stream at a minimum of 128kps which increases buffer issues. Yes, 802.11n technology is faster, but it won't eliminate signal challenges. Satellite radio can be heard anywhere in the U.S. (including Alaska) and Canada.

Sound Quality. Music streaming any device through an FM radio will pretty much give you FM quality sound. Satellite radio is CD quality.

Practicality. There is a mass of people out there, including myself, that don't care which device can hook up to my car to provide a similar service that satellite radio provides. I like getting in my car, turning on the active radio that it came with, and listening to my presets without having to think about yet another device that I need to connect with in my already cluttered digital life.

Content. There is no contest in this area. Just go to the SIRI or XM web sites and look at the channel content. World class news, music, comedy, political, and every category you can think of is right there. Internet radio is more of an underground environment with a few overlapping exceptions. Don't get me wrong, I love some of the content that it provides as well as anyone. But again, everything has its place. Like SIRI having an iPhone application. Are you diggin' this yet?

Here is the bottom line. I don't mean this to sound like a commercial for SIRI. That is not the intention at all. There is just no chance that satellite radio is going to die. None. I am not saying that Apple (AAPL) devices are irrelevant because that simply isn't true. It's a great technology and there are plenty of people that love the idea of hooking up their iPod to the car radio and streaming the Internet through it. The point is that there is a market for both satellite radio and Internet radio. One will not cancel out the other. I just happen to be one of the people that would rather pay $12.00 a month for massive professional content at CD quality sound instead of $30.00 to $130.00 a month for inconsistent streaming and FM radio quality. I can get that on my laptop for 60.00 per month with a satellite card.

OOPS!! There's that "S" word again!

Disclosure: Long SIRI

Comments

[pats:]

Dude
Do a little better research please before you publish. The Iphone moving in a car would not use 802.11n. That is a wifi fixed location standard. The Iphone uses the ATT 3G HSPA or 2G Edge network to move data. The cost of the data network is 30 per month unlimited data. Don't cloud your discussion with 100$ phone charge. I pay 9.99 for the phone on a family plan but what does that have to do with sat radio. On the current Iphone you can use a line-out via the dock connector. This provides minimal signal loss if your radio supports line-in. The FM you talk about would be for older model radio which are not equipped with line-in. I agree with your issues on buffering and stream quality, but I have listen to streams via Pandora and normally have no issues. The service is free not $12. The $ 30 data plan is a sunk cost if I want to get my email and surf the web so I now get streaming audio from all over the world for free. The quality is professional as I can stream about any station. Satellite may not be dead, but an Iphone can be a suitable replacement in all kinds of situations. As an example avid sports fans might subscribe to XM to get their fix of baseball. The Apple App store has a major league baseball app cost $10 and has streaming home and visit play by play. I can pay 10 for a season or about $70 for XM.

May 15 08:02 AM

[Gino Lattarulo:]

they are to be released later this year with the 802.11n standard. Broadcom, has announced the new BCM4329 combination chip featuring 802.11n WiFi. You should do a little research yourself, dude

May 15 08:08 AM

[pats:]

Gino
You missed my point. The WIFI standard is fixed point short range. The BCM4329 chip does not exist in any Iphone and your guess is based on a bunch of rumors. If you are going to discuss 802.11 standards, then you are talking fixed location not mobile. The 802.11 standard is more then capable of streaming high fidelity audio and video. Apple does not need to use FM to talk to the radio, most modern car radios have line in which allows the signal to travel via a wired connection. The FM would provide a convenience but I use my line in on my XM equipped car radio. The problem I have with your argument is you seem to have a very limited understanding of the network technologies, but you then conclude that satellite is superior and the other technologies will never close that gap. The reality is ATT network works great where they have decent 3G network coverage but they do not have the coverage of the satellite network. Most users could care less that the signal comes from Satellite or land based cell towers. The time window of opportunity for satellite is limited. The cell phone companies continue to build out their network coverage. Will they ever cover the whole world? No, but if an individual can get a decent cell signal in 95% of the places they travel, then most will skip the $12 per month charge unless the content is unique for the service. SIRI needs to build the user base and with the car market in the dumps and the economy they failed to grow the user base this quarter. I hope they succeed but to say satellite radio will succeed means they need at some point soon turn a profit. They have high fixed costs and need to add users since the marginal user adds very little cost. I wish you luck. I currently have a small position in SIRI 20K and much larger position in AAPL but I can't see myself holding the SIRI long term.

May 15 09:44 AM

[Alan D.:]

802.11n is faster wifi, that's all - everything pats said is accurate. 802.11n means you can "do wifi stuff faster" but has nothing to do with "internet in the car" unless you're parked outside your house or a Panera...

What the BCM4329 adds over the existing model is both FM transmit and receive capabilities, so you no longer need an FM transmitter to hear the phone over your (car) stereo. Of course, I bought an FM transmitter for my iPhone 3g for $15 including shipping.

Other issues with your article - I pay $90/month for voice + 'unlimited' data + SMS. 450 daytime minutes plus free nights & weekends. If you need more than the base plan, you'll pay more, obviously...

When push comes to shove... I am long in both AAPL and SIRI but to think either will have an effect on the other because of 802.11n being added to the 802.11g that the iPhone already has, is inconceivable. (Yes, I know what the word means.)

That all said, I think the streaming SIRI/XM Radio app for the iPod/iPhone WILL provide some number of new subscribers/new revenue, at a lower support cost... IF AT&T allows us to stream it over the 3g network. They've already forced the blocking of Sling Media's SlingBox app over 3g...

May 15 09:46 AM

[great1putt:]

Agreed...Satellite Radio is just too convienent, channel choices are many, and IMO $12 /month is too low. I would be more than happy to cough up double that for the satrad in my car or at home. Parties at home are a breeze...never have to change a CD or hire a DJ. Satrad is not going to disappear, the markets are open to other apps and there is still Europe, Asia, and S. America to provide service to.

May 15 10:00 AM

[Gino Lattarulo:]

Wireless radio component specifications contained within beta distributions of iPhone 3.0 firmware reveal support for a new chip enabling low power 802.11n that's bound for Apple's third-generation iPod touch. It's therefore also likely to be included with new iPhone models.

May 15 10:04 AM

[great1putt:]

Great argument but a simpleton such as I outnumber the ones like you who can figure all that out you just informed us on. A large majority of us just want to go have the satrad installed and be done with it. We don't want all the bells and whistles on a phone. I feel the experts in tech may be ignoring us simples out there that don't do tech. Again, I would almost be willing to wager that around 3 out of 4 don't want the hassle of what you are discussing. While it may be simple to you, it is not to us. I feel we drive more subscriptions to SIRI than techies who love the "cool" stuff.


On May 15 08:02 AM pats wrote:

> Dude
> Do a little better research please before you publish. The Iphone
> moving in a car would not use 802.11n. That is a wifi fixed location
> standard. The Iphone uses the ATT 3G HSPA or 2G Edge network to move
> data. The cost of the data network is 30 per month unlimited data.
> Don't cloud your discussion with 100$ phone charge. I pay 9.99 for
> the phone on a family plan but what does that have to do with sat
> radio. On the current Iphone you can use a line-out via the dock
> connector. This provides minimal signal loss if your radio supports
> line-in. The FM you talk about would be for older model radio which
> are not equipped with line-in. I agree with your issues on buffering
> and stream quality, but I have listen to streams via Pandora and
> normally have no issues. The service is free not $12. The $ 30 data
> plan is a sunk cost if I want to get my email and surf the web so
> I now get streaming audio from all over the world for free. The quality
> is professional as I can stream about any station. Satellite may
> not be dead, but an Iphone can be a suitable replacement in all kinds
> of situations. As an example avid sports fans might subscribe to
> XM to get their fix of baseball. The Apple App store has a major
> league baseball app cost $10 and has streaming home and visit play
> by play. I can pay 10 for a season or about $70 for XM.

May 15 10:07 AM

[Neal Barkett:]

Simplicity of access to Sirius Xm's content at a reasonable price. Valid arguments on both sides. But GINO is right Sirius Xm is here to stay! The economy is the set back more than anything for all business. There is room for compitition and always will be, but the content is the heart beat of Sirius Xm. Not easily duplicated and will always will be working on improving, that's job one! With changing tech. almost daily the one anchor that stabilizes Sirius Xm is simply CONTENT. If you have an audio media company that could reach everyone very easily & inexpensive but had not much content why would I want to be a sub. There is such a loyal fan base of Sat Radio and it still is in it's infancy and most of all it is still for the most part an unknown product that is not comprehended yet by the potential consumers. The more I think about it I feel they are waiting for some stronger signs of an economic turn around before coming out with a a strong marketing campaign. They may see it as money wasted if consumers are short on cash. In years to come it will be one of the top growing companies in America period.

May 15 10:58 AM

[bmcglynn:]

An interesting viewpoint, although I disagree. I do believe that Satellite radio will die, although I don't think that the iPhone with an FM radio will kill it. First, let me correct three points in your post. 1) Satellite Radio is not CD quality. Satellite radio uses a transmission standard that dates back to the mid 1990's. Compare that to Internet Radio, a software-upgradeable system, which uses technology such as the AAC codec that is far superior to anything satellite radio can offer since it can be upgraded whereas satellite cannot. 2) Internet radio does not have buffering problems. New technology using the Real Time Streaming Protocol removes this issue with a new delivery mechanism. The iPhone supports this, as does Windows Mobile. 3) Internet Radio is not an underground business. CBS, Yahoo, Clear Channel, Emmis Communications, CNN, and more have all embraced Internet radio. Much of the content on Satellite radio is available on Internet radio with superior sound quality - for free.

If you're paying $30 already for an iPhone data plan, why pay an extra $12 for a piece of proprietary hardware with inferior sound quality? The biggest advantage for Satellite radio is the ease of use. Until Internet radio can provide single button access to music in the car, it will always be a distant second to Satellite radio. Having looked at a new BMW and the built-in 3G access in the dashboard, Internet radio is not far away from being a single button-press away. Thus, why spend an extra $12/month for satellite radio?

May 15 11:54 AM

[Mr. Stupid:]

Anyone going on stock today? Doin again. Ben down all week.

Do you think the iphone app was cancelled?

Frank

May 15 12:08 PM

[markus:]

Hey guess what! Someone is building an attachment to hook up to my car so i can plow fields. No need for a tractor now.. Oh and another company is building an attachment so i can float and motorboat myself across the water. No need for a boat now! Gee who knew that the tractor and boat industry would die because of the all in one car!

Markus

May 15 01:09 PM

[GSlusher:]

"Music streaming any device through an FM radio will pretty much give you FM quality sound. Satellite radio is CD quality."

Not on my Sirius radio, it wasn't. It used **FM** to connect to my car system. The radio is still in the car (2004 Prius), but hasn't been turned on for about 2 years. I dropped the subscription some time ago. That took some arguing with the Sirius customer "service" rep, but it got done. In contrast, my iPod feeds directly into the car stereo using the CD changer connection and the dock connector. (It probably won't work with the latest iPods, but works fine with my iPod 5.5G and Nano 2G.)

May 15 02:35 PM

[Gino Lattarulo:]

GSlusher, you are correct. I Apologize for not clarifying. The premium sound quality comes from the factory installed radio versions. You are right about the retail add on units sounding no better than FM

May 15 03:06 PM

[yoyoYO:]

gino, he didn't say 802.11n wasn't coming via the broadcom chip...he was saying that -- in a moving car -- the device wouldn't rely on wifi to transmit the data...it would be via 3G or EDGE.


On May 15 08:08 AM Gino Lattarulo wrote:

> they are to be released later this year with the 802.11n standard.
> Broadcom, has announced the new BCM4329 combination chip featuring
> 802.11n WiFi. You should do a little research yourself, dude

May 15 04:25 PM

[Mr. Stupid:]

I have 802.11g....Is that a good signal for cars or is "n" better? Also does any on here know what Siri will do next week. If so give me the scoop. My bet is it will go up and down a little.

Frank

May 16 12:28 AM

[DjVariance:]

I don't have a problem with alot of what you say but you are way off on this one. I was an original subscriber to Sirius and I just dropped last month because my Pandora / Yahoo Music / WunderRadio / Miasto ...
blow Sirius away. First of all, after cancelling 2 subscriptions to Sirius, I saved almost 20$ a month. That alone almost covers my 30$ data package that I use for a ton more than the radio apps including games, news, and GPS. In addition to that, I could not get Sirius reception all day in my office, now with the Iphone and my Altec Lansing T612 I am enjoying much more music and other content than I ever could. The only thing I miss out on is Howard, and I can live with that. He is on less and less and will probably be done soon anyway. Just had to let it go.

The guy/girl who invented Sirius even said Sirius was doomed to internet radio. When the technology catches up and car radio's can stream internet radio for free, it will be all over.

Sell your stock, collect your 35Cents a share, and let it go.
It's a sinking ship.........

May 17 10:29 PM