Sirius Benefits of an iPhone App

There seems to be a lot of excitement surrounding a new Sirius XM (SIRI) application for Apple's (AAPL) iPhone. Sure it’s nice to have another way of receiving the Sirius XM service on a device that has sold millions and will probably sell tens of millions more by Christmas, yet it will probably not result in any new subscribers to Sirius. So what can the iPhone do for Sirius XM?

One possible benefit would be to lower churn. With an OEM acceptance rate of approximately 50%, having this option could help to build brand loyalty and increase that number.

Consider the starting point of most new subscribers as coming from the local car dealer. Many of the new car offerings include “bundled” Sirius packages; either backseat TV or a Travel Link navigation system. No new car owner wants a big screen in the middle of their dashboard that doesn’t work six months into ownership. These types of offerings increase the likelihood that a consumer will opt to retain the service as the free trials expire. If the customer gets the initial trial period and learns that they can also get the service through their iPhone, it becomes a bundled service.

The iPhone application is similar to having a bundled Sirius package because it is through the subscription to Sirius that the iPhone application will work. When viewed as an overall package that includes Sirius in your car combined with Sirius on the go, it adds value to the consumer and could result in a higher “take rate” and lower churn overall.

The iPhone itself is a marvel of modern science. Content is king however and so far their is no better way to get Howard Stern, the NFL, NBA, MLB, Nascar and a wide world of sports that include everything from soccer to lacrosse, CNBC, Bloomberg and a world of news and talk offerings, Oprah, Martha and all the other celebrity talk channels. Combine all that with the music offerings offered and it just may turn out that Sirius helps to sell more iPhones because of the application than it receives as a result of it.

The end result is that Sirius will add more value to the iPhone by providing content to it. Either way it’s a win-win for Apple and Sirius XM, as Sirius will in fact benefit from it. Now the companies should work together to get an actual application to be included in the iPhone at the point of sale. It’s becoming more and more obvious that consumers would like this option.

Position: Long SIRI

Comments

[ARI D K:]

The good news for SIRI XM is that big insitutions such as Lehman Brothers, as well as phone CO like Verizon taking positions with Sirius XM. In the next few days we will see more and more of these kinds of actions. Hey let's face it, this is a hell of a price to load up now. IMO it will not only be Apple and the ipod, there will be other gadgets and devices I'm sure like GPS land and marine weather , sprint new sansung phone, all will start to materialize like Mel said after Labor day.

2008 Aug 15 07:13 AM

[gekko13:]

So let's see here...having the service on the iphone will not increase subscribers? Will it then decrease subscribers? What the hell are you smoking? You have invalidated your whole thesis when you started talking about brand loyalty and content being king. The fact that iphone users will gain exposure to this content will make their toes tingle and maybe influence them into subscribing.

So now you are getting to be like Tyler and starting to see a black lining around every silver cloud. Give us all a break and at least put up a valid argument when you come up with a stupid premise.

2008 Aug 15 07:26 AM

[marcopolode...:]

you can bet all your money, apple will make the jump. it is in its bets interest to own SIRI. It will well the best divice with the best content.

2008 Aug 15 07:45 AM

[screwedbyTYLER:]

tyler you are the ARCHITECT of our investment destruction in sirius/xm you moronic imbecile!!!!!!!!!!!!!!... pumping sirius as a buy at $4!!!!!!!!!!!!! lest it trade up a couple of pennies because its not $1 you unapologetic vermin!!!!!
'LONG SIRI, LONG XM' but...................... ASTUTE ANALYSIS BEHIND THAT IRRATIONAL CALL AT THE TOP!!! we only need the stock to rally 300% to get BREAK-EVEN on our investment!!! bravo you IDIOT!!!

2008 Aug 15 08:37 AM

[Brandon M:]

Where in any of the above do you see the name: Tyler?

2008 Aug 15 10:52 AM

[kssmcs:]

Brandon, don't worry about that clown, he's had 15 different names already..... probably 15 more before it's all over.

2008 Aug 15 01:45 PM