Why 100% OEM Penetration Does Not Make Sense… YET
We often hear passionate satellite radio investors and fans clamoring for 100% auto installation penetration. On it’s face it may seem like a great idea, but the reality of the OEM picture is different, and Sirius XM demonstrated that today at their annual meeting.
Sirius XM demonstrated the dynamics of smart growth in the OEM channel, and it is a strategy that the company is focused on. A vehicle such as the Cadillac Escalade enjoys a 70% take rate. This means that 70% of those vehicles equipped with SDARS become self paying subscribers. By contrast, economy cars carry a 30% take rate. A substantial difference.
It is not only the take rate that matter though. The length of time to see a return on the money invested is also a major consideration. Vehicles that have a 70% take rate become a “break-even” proposition after only 12 months, while the 30% take rate vehicles take 29 months to become a “break-even”.
The length of time it takes to get a return on their investment needs to be a major consideration of Sirius XM. While a subscriber acquisition cost of $61 may not seem like a big number, it becomes substantial when you multiply it by a million. In simple terms, would you rather get back an investment of $61 million in 12 months, or 29?
Right now it is smart growth that Sirius XM need more than a bigger penetration rate. Expanding penetration is great when a company is making money, and that day will come. Understanding the dynamics of the OEM picture becomes important because it is such an integral part of the Sirius XM business model.
Long Sirius XM Radio, No Position OEM’s
Looks like hoping for that 100 penetration rate isnt a good thing. Good they have a lot of data now on what type of car owners end up being a life long sub. Not from low end car models, as expected. Seems like they are going with smarter penetration, sounds good to me.
SXM is a big company with smart people running it. Thanks for addressing that page of the slide show.
Ever heard the story of the two Bulls standing at the top of the hill and the young bull says “im going to run down and F#@! one of those cows” the old Bull says “how about we WALK down and F#@! them all”
What is driving this stock down now? I understand that these are tough times, but there is no way this stock should be at .30 cents. I am tired, I just want to get out before the dilution and reverse split. I was able to average down from 3.50 to .65. I guess I should be greatful that I didn’t lose it all a few months ago, but I am not.
You answered your own query, Stu……the spectre of the dilution and, RS………….that’s what’s driving the PPS…………DOWN!
Tyler, did we learn anything else from yesterday’s meeting? Anything more than excuses and a picture of an I-Phone with the SIRIXM application? There has been a lot of speculation of when the application would be released. If early June was going to be the date, it seems as though they would have released that information yesterday, but what do I know.
rumors saying June 8th
Don’t hold your breath.
As I understand it, Sirius-XM has put all their eggs in the iPhone basket despite the fact that Blackberry has numbers far exceeding the iPhone.
Sirius-XM also chose to ignore the Palm Pre Web-OS and it appears that the Palm Pre will have significant traction out of the gate at a price of $200.00 .
One thing is certain, Sirius-XM isn’t nimble enough to get this right.
They are continually playing catch up and nothing appears to have changed.
Sirius really has disappointed me…Since the merger was announced they have done nothing. That was the perfect opportunity to capitalize on everything. now all this time has gone by and they cant even put out an application?
The sad part is the software was already being developed and they prob would have given it to sirius for free. Instead they shut them down. They haven’t released anything worth buying, no internet software was developed, no alternative revenue streams to add (except charging for a once free internet stream…way to say fuck you to loyal customers), they haven’t done crap with backseat, no news has been released, no direction has been set….
Sadly it seems for now…………Yikes!!!
There was a few more slides indicating Sirius/Xm will be available for all smartphones. Sirius/Xm will be also available to social networking websites such as, Facebook, Youtube, Twitter and Myspace!
stu i believe in the meeting mel spoke about the reverse split saying it will not be used anytime soon or ever be used , it’s only there as a saftey valve if needed.
i’ve knocked my pps down to .55 an plan on adding on more tomarrow , the stock,(in my opinion)is back in what i call “great oppertunity mode”
long siri