Apple's 3.0 Update Is a Sirius Game Changer

Includes: AAPL, SIRI
by: Satwaves

By Demian Russian

The combined strengths of an Apple (NASDAQ:AAPL) and Sirius XM (NASDAQ: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 (NYSE: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