Potential of The Sirius XM Interoperable Platform
Now that an interoperable device has finally arrived in the form of the Sirius XM MiRGE, it is appropriate to think about the potential of what interoperable devices can bring satellite radio subscribers. For a long time, there have been those that thought interoperable devices would streamline the consumer adoption of SDARS by removing a barrier in which service was the best one to subscribe to. With the merger between Sirius XM, and the consolidation of channels, much of that worry has disappeared. The MiRGE was a requirement of the FCC approval of the merger. Whether the company expands this concept beyond this radio (the requirement was to build and market an interoperable receiver, i.e. at least one) is unclear, but there are a lot of reasons to consider going the interoperable route.
1. Streamline The Retail Channel. While a decent selection of radio choices at various price-points is good, it makes little sense to do this with two distinct brands. Having the interoperable capabilities across all future radios would help eliminate shelf space, technical support, and overall consumer confusion. Consumers, when activating, can simply be asked which service they want as their base service. Those familiar with XM will choose XM, and those familiar with Sirius can choose Sirius. The hard core fan can choose the full enchilada. Further, the sales reps at big box stores, who already seem ill informed, will have less to remember and digest when dealing with SDARS.
2. Make Use Of Full Satellite Constellations. Devices that are interoperable now produce an element of redundancy at the hardware level that did not exist before. Additionally, these new radios can make use of the full satellite constellations that exist today. The importance of this is that should a service disruption happen with one system ( as happened to XM in the past), there is a backup in place for consumers with these radios. The more of these radios that get into the marketplace, the better for the company.
3. Interoperable Devices Buy The Company Time and Accelerate Synergies. As part of the merger, the company promised that legacy receivers would continue to receive their respective services. This promise is great from a consumer standpoint, but slows down spectrum consolidation for the company. By Consolidating the channels, certain synergies have already developed. The company is still broadcasting on both networks, but the content is almost identical. The more that interoperable radios infiltrate the subscriber base, the easier it will be for the company to begin the ultimate merger synergy of bandwidth. There may come a point in time where the company will need to buy off or subsidize switch-over of some remaining equipment, but interoperable devices in the retail and OEM channel could begin to limit the exposure that the switch will deliver, and perhaps even help to mitigate the expenses involved.
While the interoperable device is not as big a deal now as it would have been two years ago, it has the potential to be a real important factor over the coming two years. Ironically, the demand of an interoperable device was made to deliver consumer benefit, but these devices may benefit the company even more.
Position – Long Sirius XM
Some people have commented on the high price of this first interopperable radio. Let’s not forget that it is not unreasonable to think that there will be other interopperable radios coming out in the future – at less cost.
I think the psychology of having 2 services is a little like the TV battle – high definition versus blue ray(or whatever it is called). People waited on buying TVs to see which one would become the standard. I am sure people have held off buying either Sirius or XM, with the perception that there would be one service eventually, and one piece of hardware to get that one service.
Even though Sirius XM may be two services, the thought of buying one piece of hardware which can get either should be a great selling point, and may spur retail sales to those who have been waiting for one service. People, I think, will see this as one service, just as cable tv is one service. With the one-service cable tv, where you can get basic cable, you can also pay extra and get “premium channels.” I think the perception here, with Satellite Radio, will become the same. As we all know, perception sells stuff.
Phew, well put. thanks
Also, the company will generate more revenue from these devices than from a tradition 1 company radio. It’s the way to go from an economic perspective for the company, and many consumers will just sign up for the complete package.
Channel Consolidation needs to happen sooner rather than later. Sirius XM needs to focus on additional premium content and additional services in order to remain relevant. The delivery mechanism of content is not nealy as important as the content itself. I think sirius should be using some of their bandwidth to create a custom channel service. The subscriber should be able to customize music preferences via a web site. Sirius would use some bandwidth to stream content to a subscribers Hard drive based sat radio. This would be an app killer for all the subs complaining about the consolidated channels (the loss of others…deeper play lists, etc).
sirius needs to remain the king of content! They cannot stop adding to their portfolio. I’m not a fan, but could you imagine the subscriber increase of adding in Rush Limbaugh? I know they are not positioned to pay for this type of exclusive content right now, but it needs to be in their long term strategy.
A couple of things.
1) Even if they free up alot of bandwidth what would they do with it?
They have said they have no desire to do tv, They could do Nav and Gps im sure.
2)Rush limpball sucks but i agree wtih James. If they can afford to pay mad dog all that cash they
should have went after him. There are enough people that listen to his rambling to have an impact on sub numbers. I personally dont like him but alot of people do.
There are alot of other talents that siriusXm can get.
The most important thing is to get the debt done and then after that become cash free.
Once they start making money they can do what they need to do to bring in more content.
Bandwidth is gold, better than gold. Owners of bandwidth own a part of our invisible universe. The more you have the more you can do with it.
This new receiver made me think today how much this is not Sirius, Not XM. Its a new company called Sirius XM. I bet they would love nothing better than to cancel all current subscriptions and start with one company that owns all of that spectrum where they could scrap all the old receivers that only can receive one sat or the other.(of course if it wouldn’t tick everyone off and cost a ton)
Why do you think all TV’s are going digital February 9th at the governments expense of $40 per household…it’s so they can get back a part of the spectrum. Analog takes up more bandwidth than digital.
It’s hard for me to get even remotely excited about this news. As you said…this WOULD have been big news if it happened awhile ago.
Interoperability-schmopability. 🙂
Seriously.
Sirius’s presence at CES was pitiful at best….and looks like the threat of internet radio is growing and becoming more a reality.
I wouldn’t even be surprised if Internet radio has a commercial during the superbowl and Sirius doesn’t. This was suppose to be our time by now….(sigh).
There seems to be no excitement or “buzz” if you will about Sirius anymore. Nothing, including the long awaited “interoperable” radio can move this stock. At this point…it’s hard for me to even get excited about what will happen IF Sirius is able to refinance all it’s debt. THAT is how far the stock has been beaten down. I hate to use the term, but DEAD MONEY describes this perfectly…and it’s hard to imagine ANYTHING anymore lifting this stock.
Sorry to be so down about the interoperable radio news….but I can’t help it. Little to late.
friggen it’ll be ok.
I am some what of an early adopter of technology, I buy when its too expensive and the hot thing. I have had a digital TV set up since 2002, the digital conversion was supposed to happen in 2006 but was pushed off. I have had an HD TV since 2001 and was informed about bluray then also. People thought I was crazy when I talked about this stuff back then. Now its “ALL THE CRAZE”. But I wasn’t even the first into HD and all digital over the air tv. I learned if from thousands of others who adopted HD years earlier.
When I was in elementary school in the 80’s I predicted that every american would be located by a “number”. No one believed me. I said, your going to have a phone, and people will dial your name and it will ring in your pocket. That was crazy thinking when land lines were still rotary dial.
When I was in middle school I told my friends, someday I will be able to walk around listening to rap all the time, not an fm walkman or tape walkman, but constant streaming content. They loved the idea. This idea is sirius. My brother adopted early, I have yet to get in. This tells me two things, one: Sirius is ahead of its time, portable audio wasn’t popular even with cd players until the ipod came out. Im surprised there are so many people ahead of me in this line so something is holding me back. Two: It is access. The XMP3 is too expensive. They won’t stream to my samsung instinct phone.
Some think that internet radio is going to take down sirius but that will never happen. History proves the big man takes down the little man and money always prevails over free. Free internet won’t survive or won’t become mainstream. Its not controllable so it can’t survive. a big company will eventually take over anything that is good and make money off of it. Things like Sirius XM on Starplayr for windows and iphones is what will be streamed to these new internet radios.
Think about me sitting here at my computer, im streaming sirius, AT A COMPUTER STREAMING SIRIUS! Why in the world would I leave my house, and stream free internet radio in my car? I wouldn’t because free internet radio sucks. I have been through it. The windows Media player internet radio. And screw Rhapsody I didn’t even bother with that it was so poor.
Beta was a better format than VHS but VHS won.
Some think HD DVD was better than blu ray, Blu ray won.
It might be a battle but Sirius has the backing of dozens of auto companies and has experience, product, penetration, income and is easy to use and getting easier.
Remember, Mel said it himself. Sirius XM is not a Satellite Radio company, its a media company that broadcasts its content over satellites. We should all be supporting Mel because he understands this and is already pursuing his vision.
Thanks for listening, sorry if anything comes across wrong Im trying to type ultra fast before work.
Yes, James…..I don’t like Rush either but he should be on Sirius/XM.
No, we don’t need anything interoperable. Choose one of the systems & sell the bandwidth and constellation of the other….of course after a reasonable time to allow subscriber migration & not get a bad feedback about breaking promises. This should have been an immediate priority after the merger.
Good article Tyler..
For exisitng subscribers it is not a big deal. Some may upgrade. When our current radios fail, a lot of current subscribers may upgrade to the new radio.
For new subscribers it makes sense to go with the new radio. I think at some point in the near future it will be the only radios avaiable from SiriusXM for the reasons Tyler stated.
It makes economic sense to reduce manufacturing and inventory costs.
SiriusXM justs needs to keep cutting costs everywhere possible and this is one more area.
imho
vaporgold