For as long as I have been involved in satellite radio, there have always been the rumors of a relationship with Apple. The iPod has redefined how people listen to music, and for satellite radio fans, a partnership seemed natural. However, Apple has never been a singer of the same tune, and to this day, integration of satellite radio and Apple has bee a pipe dream.
StarPlayer may change the rules, and this could be welcomed news for satellite radio. Let millions of iPhones sell. They are going to sell anyway. Get included in a slick iPhone application, and you could be in business. The day for iPhone and satellite is now approaching thanks to StarPlayer. Kudos to StarPlayer for making many satellite dreams come true!
Jump up and celebrate! Okay, now that you have all of that out of your system, lets look a bit more deeply into the dynamics of this situation.
First, this is not a true integration, and Apple is not promoting the product. This means that iPhone users will have to find their way to StarPlayer. While typically this is not a huge issue, it does slow the process down a bit.
Second, the fee for downloading the service has not yet been established. Likely, the makers of StarPlayer will want their two cents out of this, and if it were me, I would want money on a recurring basis, not a one shot deal. This could mean that subscribers will be paying a fee above and beyond the subscription to Sirius XM.
Third, the service is the Internet feed. This means that not all Sirius XM content will be available to iPhone users. This can cause customer confusion, and confusion is never a good thing. Additionally, royalties on Internet feeds are more expensive. Sirius XM will still make money, which is good, but it could change the dynamics of certain metrics. Particularly if the StarPlayer application is widely popular.
Fourth, the additional features such as album art, and lyrics are awesome. These are features I use all of the time on my Slacker G2 player, and add a whole new dynamic to the music experience. It may not seem like a big deal, but learning a bit more about the artists you are listening to, and being able to read the lyrics makes listening to that artist more compelling.
Fifth, and application such as this could hamper Sirius XM from ever getting into the main Apple Platform. It could also hamper other potential deals. The more compelling the iPhone becomes the harder it is for the next guy to do something unique. What if Sirius were trying to work with Google on their phone with T-Mobile? Or Verizon and the new Blackberry Storm?
Sixth, is volume. Will the application be a success? If it is, great! The high influx of subscribers will help the business. If it is not a success, people may consider it a failure on the part of Sirius XM.
The promise of an iPhone application has the potential to dramatically impact satellite radio. Millions upon millions of iPhone users are out there, and the ability to tap into that market can be huge. There is reason to be enthusiastic about the upcoming StarPlayer application, but investors should temper that enthusiasm with a a dose that success will not happen over night. Just my opinion, but after Apple rumors every year since 2003, I consider my optimism cautious. Happy to see the development, but cautious just the same.
Thanks Muscle and others
Position – Long Sirius XM, No Position Apple