Verizon Inks Deals With Automakers For Wireless In Cars - What Does That Mean For Sirius XM And Pandora?

| About: Sirius XM (SIRI)

It was only a matter of time before wireless capabilities entered the realm of the dashboard. Thanks to deals between Verizon, Honda, Toyota and others the reality of a connected car is fast approaching. Think about the possibilities and one can not help but be a little excited.

For Pandora (NYSE:P) a wireless dashboard is welcomed news. It will allow the company to gain more exposure to more listeners and by extension increase revenues. A seamless Pandora connection to a dashboard that uses data other than through the cell phone is a step that Pandora would love to see happen. Of course, competitors like Spotify, Slacker and Sirius XM (NASDAQ:SIRI) will be there as well, but Pandora enjoys the benefits of a massive user base that will welcome the added capability.

For Sirius XM it does not mean the end of the world if the company positions itself properly. Rather than that it presents new opportunity for the satellite radio provider. For years now I have been chomping at the bit for the day that Sirius XM Internet Radio developed to a point that it was a viable competitor from a music standpoint for the likes of Pandora, Spotify, and Slacker. A seamless wireless dashboard brings a whole new meaning to audio entertainment in the car. It actually forces companies to deliver their best or be left behind.

With all of that being said, many consumers with newer cars are already connecting their cell phones to the dashboard. The Verizon (NYSE:VZ) deals simply makes things more simple. In addition it provides Verizon an opportunity, at least in theory, to work deals with services like Sirius XM, Pandora and others.

There is a bit of a race to get into the dashboard, which may speed things up even further. Samsung is launching the Galaxy S3 phone with MirrorLink. MirrorLink seamlessly "mirrors" your cell phone screen onto a cars head unit. MirrorLink approves apps for use while a car is in motion, as well as at rest. While driving only approved apps will operate. This would tend to be apps that do not distract the driver. Sony is launching head units this summer that carry the MirrorLink standard. Check out this Sony video and see what is about to become the future of the auto head unit.

Thus there are two solutions at play and audio entertainment companies have to be ready for both. The Verizon solution is a separate account while the MirrorLink solution uses your existing cell phone.

The only downside to this news is if a company is not prepared to participate as these technologies launch. Consumers are the big winners here, but all of these companies can profit from a happy consumer. It will be an interesting year in audio entertainment as well as with the cell phone and car industries. Now more than ever these branches of business are becoming more intertwined. The connected car is upon us in more ways than one.

Disclosure: I am long SIRI.

Additional disclosure: I have no position in Pandora or Verizon.