The term “Satellite Radio 2.0″ came out of nowhere today in Sirius XM’s conference call regarding their financial results for the second quarter of 2010. No one was expecting anything new in terms of hardware to be discussed in the call today and what Sirius XM CEO Mel Karmazin did was give everyone a glimmer of something even better on the horizon.

Sirius XM is very committed to continue to innovate. Satellite radio was a great example of that innovation and Satellite Radio 2.0 where we believe take it to a new level. While we have been reducing costs and making the organization more efficient. We continue to invest in R&D.

Our next generation of satellite radios are expected to offer significantly more choices for the consumer and contain functionality that does not exist today in our radios. There will not be any significant increase in our costs, to bring these radios to consumers and we expect to have the first Satellite Radio 2.0 products in retail stores by the holiday season in the fourth quarter of 2011.

So what exactly is Satellite Radio 2.0? That seems to be the burning question of many, and my email inbox lit up with people wanting to know more. Well, at this point all anyone, including myself, can do is speculate. Analyst Barton Crockett of Lazard Capital was the first person up in the Q&A session, and he did what everyone wanted by asking for more flavor on Satellite Radio 2.0. Karmazin’s response gave a couple of hints but was still cryptic.

“…it’s going to provide for us to have more capacity, which would mean more channels and more offering as well as more functionality as well. Beyond that, we’re currently in the process of talking to our OEM partners and retail partners about product, so I really don’t want to go into anymore detail prior to us discussing it with them.”

Effectively, Karmazin just started a small fire that will grow over each passing quarter until August of next year when they preview their new line-up for the Holiday shopping season. That is one year of solid anticipation, and four quarters of people wanting a bit more flavor. The technique is oft used by many companies to build some excitement and anticipation. Usually such hints come closer to the actual release, causing me to think that we will begin to see some 2.0 product prior to Christmas of 2011.

If I had to guess, I would say that Satellite Radio 2.0 will be based on new chip-sets capable of better handling data that is delivered from the satellites. It also sounds like they are working on or have already found a more efficient way to compress their signals to deliver additional content. Perhaps the company will be able to add additional information such as album art, or maybe the units will be more inclined to act as smart devices and will allow for some integration with the Internet Radio side of Sirius XM. There are many possibilities that satellite radio fans can ponder as the next 12 months pass. Certainly we will see more information in the coming quarters.

What features would you like to see on satellite radio that currently aren’t there? Your ideas could become reality with the new Satellite Radio 2.0

Position – Long Sirius XM Radio