According to an article in the Wall Street Journal, cell phone giant Nokia is deep in talks to acquire Navteq, the the company that produces navigation software and mapping. Satellite radio followers should recognize Navteq as a partner to both Sirius and XM.
What this demonstrates, and quite clearly I might add, is the landscape we are now dealing with in the world of data information as well as audio information. Nokia has long been known as a manufacturer of cell devices. They are now reaching beyond that niche, and trying to enter the data service market. Crossover into new arenas is happening all around us, and it is this type of crossover that makes the competitive landscape more difficult to define. The lines are constantly blurring. Navteq currently has a market cap of nearly $8 Billion, and has existing deals with not only the satellite radio players, but terrestrial radio and automobile manufacturers as well.
Discussions of the Sirius and XM merger have often centered around the audio entertainment aspect of the business. While music and talk programming are currently the bulk of their business, the satellite radio providers also have a data component as well as a video component to their business models. These fledgling aspects of the business also need due consideration from a competitive landscape point of view. In vehicle experiences have quickly grown from listing to a radio to also receiving data, and entertaining the children in the rear seat.
Now while it may seem a reach, the possibility of a Nokia partnership in satellite radio is not beyond the imagination. To date, Sirius and XM have entered into relationships with cell carriers and not manufacturers. The path to the cell phone sector rests with the manufacturers. That is how Apple got into the arena with the iPhone. In the past few years, cell phones have become far more capable than in the past. The day of the PDA is virtually gone, as cell phones have become more capable.
The popular thought is that factory installed satellite radio's in vehicles is the future of this sector. That may carry some truth, but it also may be short sighted. An example is already becoming available with Ford and their SYNC system. SYNC allows devices to marry into the dashboard with relative ease. SYNC allows a user to connect an MP3 player, a cell phone, etc. right to a central system. From a consumer standpoint, what is more valuable? A satellite radio that is in the dash of your car, or a satellite radio that is in your cell phone that integrates with your car and also goes everywhere else with you? There are many paths that can be taken, but one thing is clear. You need to have a product that consumers want.
How all of these various ownership and distribution issues ultimately pan out is yet to be seen, but clearly, the lines between manufacture, distribution, and final product continue to blur, as do the types of companies that vie for the attention of consumers. While some may think this is crazy, the deals with GM, Ford, Honda, Chrysler, etc. may not matter very much in 5 years. What may matter is getting hooked into cell phones via the manufacturers and then the carriers.
Position - Long Sirius, XM. No Position Ford (stopped out Friday), GM, Navteq, Nokia, or Apple.