Apple's 3.0 Update Is a Sirius Game Changer

By Demian Russian

The combined strengths of an Apple (AAPL) and Sirius XM (SIRI) partnership are now becoming even more clear. In my last article, I explored the possible synergies between the two companies – the potential of the satellite radio provider breaking into the iTunes dashboard and how the looming Q2 release of the Sirius XM app could turn the over 37 million iPhones and iPod Touches out on the street into the new transistor radios of this generation. This time I will delve deeper into what Apple’s coming iPhone/iPod Touch OS 3.0 update will mean for Sirius XM and its soon to be released iPhone/iPod Touch app.

While the ability to stream Sirius XM’s internet feed on the iPhone and iPod Touch carries much excitement, there are those that are quick to point out that the internet channel lineup is lacking some of the content of Sirius XM’s full satellite lineup. While it is true that the internet feed is somewhat music-centric and lacking some of the news and sports programming of the full satellite lineup, it could also be argued that Sirius XM’s original and most popular content is offered through the internet feed — including Howard Stern, Oprah Winfrey, Martha Stewart, Theme Time Radio Hour with Bob Dylan, Tom Petty’s Buried Treasure, POTUS Politics, NPR and CNN.

The reason that some news and sports content is missing from Sirius XM’s internet feed is most likely due to contractual licensing agreements with those content providers. While Sirius XM’s Chief Content Officer, Scott A. Greenstein, did say during the Q1 conference call that the coming app would offer “an expanded programming lineup” that will include “new talk, comedy and music channels,” it is unlikely that the total satellite lineup will be available via the internet feed. This is due to some content providers wanting to protect their own internet offerings. While Sirius XM’s internet content lineup is very strong, there will always be those that want everything.

Another concern pointed out by critics is that the coming iPhone/iPod Touch app will require internet access to work. While all iPhones have unlimited internet data service included in their monthly plan, the iPod Touch requires a WiFi connection to access the internet. Although AT&T (T) has extensive national data coverage, there are many rural areas that do not have full data coverage yet. While there are places where an internet signal is preferable, such as in an office building where there isn’t a terrestrial repeater nearby, there are places where the satellite signal is also preferable, such as when you’re traveling across country and you find yourself in the middle of the Mojave desert.

Enter Apple’s 3.0 Update

A few weeks ago, Apple presented the blueprint for its upcoming iPhone/iPod Touch OS 3.0 update and released the SDK to developers. There are over 1,000 new APIs (Application Programming Interfaces) offering amazing new capabilities. Digging deeper into this release offers many clues as to how Sirius XM may utilize this new technology. The possibilities are nothing short of game changing. While some features have been reported on, the big one has been overlooked — until now. The new APIs offer “support for applications to communicate with hardware accessories attached to iPhone or iPod Touch” and “apps can now communicate with accessories via the dock connector.” The dock connector “provides a standard electrical interface and the communication protocol for accessories to charge, control and interact with both iPhone and iPod.”

What this means is that every iPhone and iPod Touch out there can be turned into a full-fledged Sirius XM satellite radio with an inexpensive separately purchased car dock, home dock or portable accessory kit. Sirius XM’s full internet and satellite offerings — everything, everywhere. In addition, customers will be able to subscribe and upgrade their Sirius XM service simply with a few touches of their finger. This will bring Sirius XM to the masses. Do the math.

Disclosure: Long SIRI

Comments

[Mr. Stupid:]

When is all this going to happen? When? Tired of the waiting game.

Frank

May 17 04:19 PM

[R A F:]

Let's talk technical analysis - risk versus reward. The current bottoming formation (rounded over the last six months, with prices now above 100 day moving averages, which have also turned upward) projects increasing support on pullbacks. Downside risk is limited ot .35 (only in a bankruptcy, which would only occur if John Malone intends to betray current shareholders and strip the company -most unlikely based opn his past track record and stated intentions). Upside potential is significantly greater than this .35 maximum exposure, suggesting current longs are unlikely to get shaken out with mild downside fluctuations from here. Shorts are likely to grow increasingly nervous as support is demonstrated on pullbacks and prices eventually cross above 200 day moving averages - which appears likely to happen within several weeks. The fundamental story (Apple relationship, great content, and reasonable subscription rates attractive to a very wide audience) all serves to reinforce this positive bottoming price action. In sum - the risk/reward relationship strongly favors being long this stock for the intermediate to longer term.

May 17 04:43 PM

[Spiderman4:]

Sirius will be at $1.00 or more by year end..

May 17 04:53 PM

[Spiderman4:]

ALso, Please Pandora and Slacker SUCK. You put the song you want to hear and have to wait 5 or 6 songs to hear it, or it most of the times doesn't even play, SUCKSSSSSSSSSSSSSSSSS

May 17 04:54 PM

[connorport:]

We must also remember that Pandora as well as other internet radio services are in litigation over royalties which essentially puts them under if they lose according to the founder of pandora. It seems to me that SIRI is the only one out here paying royalties but somehow the shoe may be on the other foot soon as everyone sees the potential of SATRAD in the future and may want to be on this side of the fence. We shall see what SIRI brings us!

May 17 07:38 PM

[Mr. Stupid:]

hey I have a feeling this week will be BIG BIG BIG for Sirius. Last week it was pretty much static so this week hopefully it will move up some.

Already excited.

Frank

May 17 10:34 PM

[Al:]

I have one problem with paying a monthly fee for satellite radio. I already have the music I like on my iPod touch. I also already have the video and audio podcasts that interest me and that I usually listen to and/or watch regularly synced over to my iPod. Local and national news is on my car radio. I am not a sports nut.

What do I need subscription radio for?

May 17 10:43 PM

[Mr. Stupid:]

What's the population of the United States???? Do you think that EVERYONE would need Sirius? We all know that everyone in this country isn't going to subscribe to Sirius for various reasons but just like every great service IT IS desired by millions.

Frank


On May 17 10:43 PM Al wrote:

> I have one problem with paying a monthly fee for satellite radio.
> I already have the music I like on my iPod touch. I also already
> have the video and audio podcasts that interest me and that I usually
> listen to and/or watch regularly synced over to my iPod. Local and
> national news is on my car radio. I am not a sports nut.
>
> What do I need subscription radio for?

May 17 11:29 PM

[wilber:]

I enjoy Pandora at times, but in no way is it any kind of "substitute" for Sirius-Xm. A nice "add-on" maybe. As to the "programs of a similar nature", this is simply BS... as they really don't compare to the advantages you get with Satellite over the long term. I've tried most of them.

May 18 08:11 AM

[The Aft Deck:]

Siri possibly has a great future as they further develop their technology, catching Apples iPhone was a great move. There ar however a lot of Siri shares out there and sizable debt, IF they can use profits to correct these they may well become an important entertainment delivery system.

May 18 12:36 PM

[macstash:]

I think everyone continues to miss the point about why Siri is so valuable... You can't get Howard, Oprah, Martha, etc... on Pandora or any other free app for that matter. This is what drives their business... original exclusive content. And Damien is right, once I don't have to buy additional hardware (i.e. portable radios, subscribe from the factory installed radio in my car) and I can have one unit anytime, anywhere, this will be a tremendous value prop for the consumer. Oh and is anyone forgetting why Liberty was interested in Sirius? IN CAR TV PROGRAMMING. Get a clue you doubters.

May 18 02:46 PM

[Michael Waz...:]

- Nnnot!..
Right? you meant this as a joke? Sattelite radio has been and will be a failure.


On May 17 02:48 PM Cartman 3:16 wrote:

> Great piece, Demian. Thanks for pointing out the great potential
> in Sirius and Apple getting together on this. Some posters here clearly
> don't understand what satellite radio is all about. Nothing else
> -- regular radio or internet -- comes close to offering the wide
> variety of programming options and universal accessibility that Sirius
> XM does.

May 18 08:42 PM

[Michael Waz...:]

Oh, I see now. "Howard, Oprah, Martha, etc.." -wow! let's jump in before everyone else does! Let's make lots of money.
Oprah rules!..

On May 18 02:46 PM macstash wrote:

> I think everyone continues to miss the point about why Siri is so
> valuable... You can't get Howard, Oprah, Martha, etc... on Pandora
> or any other free app for that matter. This is what drives their
> business... original exclusive content. And Damien is right, once
> I don't have to buy additional hardware (i.e. portable radios, subscribe
> from the factory installed radio in my car) and I can have one unit
> anytime, anywhere, this will be a tremendous value prop for the consumer.
> Oh and is anyone forgetting why Liberty was interested in Sirius?
> IN CAR TV PROGRAMMING. Get a clue you doubters.

May 18 08:43 PM

[FloridaJo:]

404 page not found


On May 17 02:39 PM Brandon Matthews wrote:

> Here is my reply...
>
> satwaves.com/blog/2009.../
>

May 19 10:10 AM

[FloridaJo:]

Another possibility is that SIRI will have to pay Apple Rimm and others through the nose to get application accessibility with the hopes of getting subscribers. Most content providers bleed for years in the hopes that one day they will have enough of a subscriber asset to leverage into something profitable.

May 19 10:14 AM

[thotdoc:]

I have a lot of content I carry also. Even with 40gigs I get tired of hearing the same music over and over.

G


On May 17 10:43 PM Al wrote:

> I have one problem with paying a monthly fee for satellite radio.
> I already have the music I like on my iPod touch. I also already
> have the video and audio podcasts that interest me and that I usually
> listen to and/or watch regularly synced over to my iPod. Local and
> national news is on my car radio. I am not a sports nut.
>
> What do I need subscription radio for?

May 19 11:02 AM

[deebo888:]

Pandora is worthless. Have you ever ran on your treadmill trying to listen to a band like Thursday on Pandora. After about 20 minutes the songs start to repeat themselves. And then when you switch to listen to O + A, oh ah oh ah what channel is that.

SAT is not about just radio. If you like radio and love listening to the same old Lincoln Park song then terrestrial is for you. There is no doubt about that. Not everyone is going to like SAT radio.

However, if you don't have any interest and you think it sucks, then why are you reading this article?

Dumbass.


On May 17 12:24 PM vassar wrote:

> Dumb article. I don't see people flocking to pay SiriusXM $10 to
> 15 a month to listen to something that is now available for free.
> I am sticking with Pandora and the dozen or so other programs of
> a similar nature that offer more than SiriusXM ever has.

May 19 03:29 PM

[dmgambone:]

Here are some points that I think many people are missing.

First, Sirius XM is moving away from a SatRad company to Content/Media company. They are expanding their means of distribution because they no longer want to be tied to a single (very expensive and limited in terms of bandwidth) source of content distribution to one that is robust is becoming move prevalent in society. With the upcoming 4G networks, wireless data communication will have the bandwidth to not only offer CD-quality streaming audio, but also other content such as video or even games. Sats can only do so much before more sats need to be launched.

Second, an iPod/iPhone app also gives Sirius the option of expanding it's offerings that can't currently be done on sats. With the app version, Sirius could (in theory) purchase Pandora and also offer a personalized music service that they could also leverage for their own use. They could tailor their existing channels based on the feedback from the personalized music service user ratings and also sell that data to other companies. Statistical data is gold in most businesses and an iPod/iPhone app can help collect that information.

Once the app is out there, Sirius XM will have a whole new set of tools that it can play with and expand it's revenue.

Of course that is all assuming that they execute it properly and have the vision to see what's coming in the future. That, is another story.

May 19 04:05 PM

[brewer:]

Uh, sat rad doesn't allow you to pick a song at all. iPod let's you own it in an instant. Pandora lets you (marginally) listen to it once.


On May 17 04:54 PM Spiderman4 wrote:

> ALso, Please Pandora and Slacker SUCK. You put the song you want
> to hear and have to wait 5 or 6 songs to hear it, or it most of the
> times doesn't even play, SUCKSSSSSSSSSSSSSSSSS

May 19 06:14 PM

[macstash:]

Michael, Not sure what the point of your comment was, but you certainly misunderstood mine. As dmgambone agreed with my assessment, people will purchase based on original or exclusive content. This model is proven and has worked for a number of media companies and is the key to their success and delivering that content over many platforms will only broaden the distribution potential and thus potential for subscribers. Why do you think the major netwworks put their shows on Hulu, itunes and other similar platforms? They are adapting to the consumers needs!


On May 18 08:43 PM Michael Wazowski wrote:

> Oh, I see now. "Howard, Oprah, Martha, etc.." -wow! let's jump in
> before everyone else does! Let's make lots of money.
> Oprah rules!..
>
> On May 18 02:46 PM macstash wrote:

May 19 08:11 PM