Wi-Fi: Satellite Radio's New Frontier

By Brandon Matthews

Last night it hit me. I mean it just hit me! Like a voice from the Almighty himself, the thoughts in my mind began piecing themselves together. Suddenly, it all made sense. My only hope is that I can now translate this concept to paper.

To fully understand this concept requires an understanding of how the two separate Satellite Radio companies competed against each other for retail subscribers. Until recently, Satellite Radio enthusiasts looked forward with anticipation to new radio offerings that each company would introduce into the market, on a semi-frequent basis. I personally own three of them. A problem of significant proportions existed with those receivers however, in that the chip subsidies paid by Sirius and XM devoured any potential profits.

When Sirius Satellite Radio merged with XM Satellite Radio to become Sirius XM Radio (SIRI), I distinctly recall making a note that the word “satellite” had been conspicuously removed from the new company’s name. With yesterday’s news that some accessories are becoming hard to find, a new picture began to emerge.

I asked myself if it could be possible, that with the open access requirement made as a concession to the merger, if it might not make more sense for Sirius XM to completely abandon the retail channel, and leave the void for other companies to fill, such as Audiovox (VOXX). Imagine me, thinking THAT!

The newest portable offering, the Sirius XM Mirge will probably be the final radio that Sirius XM produces. The facts speak for themselves. A quick trip to Best Buy (BBY) or Radio Shack (RSH) proves that the shelves are running dry of new products. In the beginning, most cars were not equipped with Satellite Radio’s. That fact has changed. As more new cars are pre-equipped with Satellite Radio head units, the need for aftermarket units declines.

The new Apple (AAPL) iPhone and iPod applications which will be announced this quarter will render the Sirius and XM portables expendable, which may explain the fantastic deals the company is offering on them now. Within the next 10 years, the company will no doubt seek a single broadcast platform and any portable or stand alone radios in existence today will probably be replaced by new, high tech gadgets that Mr. Jobs and Co. have yet to introduce, with no chip subsidies required.

Old ways of thinking are preventing most of us from seeing the future. Mobile Internet is expected to grow to astronomical proportions. Cities are going entirely Wi-Fi. A satellite signal will still be required to reach remote areas and the nation's fleet of automobiles and trucks, but the retail aspect is about to undergo a major change in my opinion. Sirius XM is reinventing itself right before our eyes. They just haven’t told anyone yet.

Disclosure: Long SIRI

Comments

[261133:]

Sounds great and makes sense, but what about the billions invested in satellites already ? If this is going to be worthless but the debt is still there, how is Sirius supposed to deal with that ?

Jun 03 12:02 PM

[vatexas645:]

I believe you are incorrect - it will likely be a long time before there is no need for aftermarket sat radio receivers. I, for one, like to listen to several stations in my home. I have a vehicle set-up, but if this were a vehicle only world, I would not be able to do so. I hope aftermarket devices do not disappear. LONG SIRI

Jun 03 12:13 PM

[JamesPS:]

I think the point is that Aftermarket devices will exist. That Wi-Fi, will be a prominant delivery mechanish for siriusXM content, that SiriusXM no longer needs to build aftermarket devices to boost subscriber numbers. customers will access SiriusXM content via iPhones, their new audio/video in home receivers (via wifi). Sat signals will still be relevant for some time in rural areas, where it will take longer for wifi to be build out. The excitement for me that was not mentioned in this article, is what siriusxm can do with their sat bandwidth, when its no longer needed!


On Jun 03 12:13 PM vatexas645 wrote:

> I believe you are incorrect - it will likely be a long time before
> there is no need for aftermarket sat radio receivers. I, for one,
> like to listen to several stations in my home. I have a vehicle set-up,
> but if this were a vehicle only world, I would not be able to do
> so. I hope aftermarket devices do not disappear. LONG SIRI

Jun 03 12:58 PM

[courtjester:]

That's very forward-thinking of you, Brandon, and I tend to agree in the long term. Short to mid-term, a satellite signal will still be more dependable than a wi-fi signal, even in urban areas in the U.S. Cities have plans to go all wi-fi, but some of those plans are still just that: plans. In other cities, the signal is spotty.

I think it would be smart for Sirius to eventually abandon the retail channel, perhaps offering refurbished/used devices as a 'legacy' option for older users (or those that just prefer standalone devices)--similar to what IBM did with PCs. Once IBM got out of the new PC business, they had more money to focus on enterprise systems and higher-end clients. Likewise, Sirius will have more money to put towards increasing value for their shareholders by paying down their debt, increased quality content, and whatever else lies down the road.

Jun 03 02:31 PM

[Neal Barkett:]

Brandon, I Think you are right on it! I made a comment last year that the term Satellite Radio might be a thing of the past. Sirius Xm is a audio content provider(for the most part) and how they get it to the customer is no doubt going to change. What makes this article so interesting is that a person could subscribe w/o any additonial cost for hardware. This of course does lead to the importance of the content! Sirius Xm's vision might put all of to shame, maybe that's why they have been playing it close to the vest?. I hope that is the case.

Jun 03 02:36 PM

[dead elvis:]

Sounds like you need to lay off the halapinos before you retire.

I am always interested in reading yours and other comments from alpha but without clear direction from "the company" and without correspondance from you -with the company -all of these articles get a little boring. They may have merit but none of them have any impact.Tempting as they are to read when I pull up siri on etrade/I wish you would give it a rest.

And as a shareholder-impact with a 2x4 is what this company needs.

How can anyone continually try to outguess flagrant stupidity?

six articles today about a company bobing up and down in the water doesnt serve much purpose unless "the company" intervenes and interacts with your thought processes.

Jun 03 02:40 PM

[Orlock:]

Could the reason fewer aftermarket devices are available be because the company has no money and demand has dropped considerably. I love Sirius, bought a lifetime subscription (which was a better investment than buying the stock). I have downloaded the $10 app for my iPhone, but sound quality has a long way to go.

I think the point of this is on track, but there is no way Sirius works without the unique program content get-anywhere appeal. True portability has been a long standing problem, if they can figure this out, they will regain consumer appeal. A joint venture with the likes of Garmin, Microsoft or Google is what they need to pop out of their funk. WiFi is an option, but they need to figure out how to do it right, which is a target they seem to just miss every time.

Jun 03 03:03 PM

[Mr. Stupid:]

That's why it's called SPECULATION. These blogs are for those with OPEN minds.

Frank


On Jun 03 02:40 PM dead elvis wrote:

> Sounds like you need to lay off the halapinos before you retire.
>
>
> I am always interested in reading yours and other comments from alpha
> but without clear direction from "the company" and without correspondance
> from you -with the company -all of these articles get a little boring.
> They may have merit but none of them have any impact.Tempting as
> they are to read when I pull up siri on etrade/I wish you would give
> it a rest.
>
> And as a shareholder-impact with a 2x4 is what this company needs.
>
>
> How can anyone continually try to outguess flagrant stupidity?<br/>
>
> six articles today about a company bobing up and down in the water
> doesnt serve much purpose unless "the company" intervenes and interacts
> with your thought processes.

Jun 03 07:09 PM

[George Johson:]

I hope your right, I would love to see the news that they license their media to all portable devices, they have the setup and the content. I love XM/Sirus! I see their stock going way up soon.

Jun 03 07:38 PM

[VicBC:]

Some good this does me on the boat and other places like the woods that don't allow me to get any other signals.

Jun 04 02:02 AM

[Jeff Brown:]

Anyone who reads Mark Ramsey's blog ( www.hear2.com ) knows that Mark has been making this argument for years. He's as forward-thinking as anyone in the industry.

Nice post Brandon. Glad you've caught up with some of the rest of us.

Jun 04 09:54 AM

[connorport:]

I still think that makes XM's satellites obsolete after all the firmware is updated and this may be happening soon as well. These extra leftovers would eliminate the companies debts and may put some overages in the bank added with all the synergies they will be ready to fly. Lets hope these debts get covered before we need a RS or more dilution.

Jun 04 10:01 AM

[connorport:]

I still think that makes XM's satellites obsolete after all the firmware is updated and this may be happening soon as well. These extra leftovers would eliminate the companies debts and may put some overages in the bank added with all the synergies they will be ready to fly. Lets hope these debts get covered before we need a RS or more dilution.

Jun 04 10:01 AM

[Jagman:]

I understand why Sirius has made no money, they cant keep track of it. I was told by a rep, whom I called to ask why I had not been billed for two months (might as well I thought, they are going to discover this and hit me for back owes) and was told that my service would be turned off if I did not pay a $1.12 debit to Sirius. It appears that the monthly subscription was an afterthought, if thought of at all. Billing resumed at that point, I was never billed for the 2 months they missed and my attitude from that is that if they cant control receivables, what is going to happen to their business down the line. Should have kept my mouth shut, I'm sure they would never have gotten around to turning my service off.

Jun 04 11:27 AM

[CGP:]

Abstract issues:
- Everywhere wi-fi is a few years off, widespread usage by 3G/4G smartphones may be closer (to the exclusion of wi-fi buildout) but is also off into the future, so satellites are still very much needed.
- How much will satellites be needed throughout their operational life and will a next generation (after the two upcoming launches) be needed?

In any case they have to be paid for in the present and near future and beyond.

In the now and foreseeable future:
- How well can they execute operations and keep the cash flowing.

Jun 04 01:37 PM

[dead elvis:]

Sorry sir didnt mean to offend you intelligence
I guess Im just a novice in life

So, we all sit on the sidelines with our open minds and vent
Since what we say or feel makes no difference on the bottom line
It makes us feel better? Like talkin to the TV .

Guess I gotta pull out websters to look up speculation.That word doesnt seem to apply with this stock issue.

Bye Bye now


On Jun 03 07:09 PM Mr. Stupid wrote:

> That's why it's called SPECULATION. These blogs are for those with
> OPEN minds.
>
> Frank

Jun 04 03:12 PM

[Gregg:]

I agree about halfway.

We still need radios outside of the car and the Iphone is not a universal device. Accessing the online stream through any phone won't happen anytime soon.

What we do need is for the retail radios to evolve. Any new radio needs to have Wifi. I would buy the XMP3 if it had Wifi. The Stiletto is great in my gym because I can still access wifi if no signal.

They also need to go after Slacker/Pandora by getting embedded in DVD players, TVs, etc through internet or wifi connections. That is where I think they are really dropping the ball.

Imagine XM/SIRI on your Tivo!!

Jun 04 04:42 PM

[boygenius:]

Won't Wi-Fi actually hurt Satellite Radio? There is no competetion right now becase it costs a fortune to launch new satellites? SiruisXM has a corner on that market. Wi-Fi /3G is not up to seed to deliever...yet. If your'e able to get Wi-Fi or 3g/4g as you travel around then SiriusXM is no longer the only game in town and the flood gates are opened for other companies to emerge....and they will!

Jun 04 05:15 PM

[Mr. Stupid:]

Well I wasn't venting....Just thought your comment was bunch of rubbish

Frank


On Jun 04 03:12 PM dead elvis wrote:

> Sorry sir didnt mean to offend you intelligence
> I guess Im just a novice in life
>
> So, we all sit on the sidelines with our open minds and vent
> Since what we say or feel makes no difference on the bottom line
>
> It makes us feel better? Like talkin to the TV .
>
> Guess I gotta pull out websters to look up speculation.That word
> doesnt seem to apply with this stock issue.
>
> Bye Bye now

Jun 04 06:21 PM