An XM Xmas?

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Though many people said there wasn't a must-have item this holiday season, satellite radio caught some shoppers' attention. The Washington Post reported Saturday that satellite radio was a hot item on people's holiday gift lists this year. Though the companies didn't state exact numbers, XM Satellite Radio (Nasdaq: XMSR) and Sirius Satellite Radio (Nasdaq: SIRI) both claimed that their products were a quite a draw for shoppers.

So much for mundane gifts like socks, sweaters, or even TVs. It appears some people may have chosen a gift that keeps on giving, all year round. Portable receivers that can float between car, home, and office gave consumers more reason to sign on, and some discounts were in place for subscribers who signed on for more than a year.

For all those who speculated on these stocks despite their lack of profitability, it seems that this holiday season has brought them one step closer to realizing the dream. XM said it is on track to have 1.2 million subscribers by year end, as opposed to 347,000 this time last year.

Despite the good news, profitability remains a long way away, and in XM's case, the stock's been trading near its 52-week high. A November article by Jeff Fischer put things in perspective, pointing out the high value placed on XM subscribers, as compared to other subscriber-based services like TiVo (Nasdaq: TIVO) and Netflix (Nasdaq: NFLX).

Still, this is good news for investors who are watching for signs that consumers will pay up for satellite radio. Increasing adoption rates will boost the service's word of mouth, and the buzz is already out there (plus, Jeff made it a stock to watch in 2004). It's no longer just investors who talk about the cool factor of satellite radio, and with more subscribers, that effect should intensify. It could be time for takeoff.

Is this a turning point for satellite radio? Talk it out on the XM Satellite Radio and Sirius Satellite Radio discussion boards.

Alyce Lomax welcomes your feedback at alomax@fool.com.