Is that the sound of ka-ching? XM Satellite Radio (Nasdaq: XMSR ) said late yesterday that it added 320,000 new subscribers in the fourth quarter, a 230% boost from this time last year.
Does this spell Sirius trouble?
Now, XM Satellite Radio boasts 1.68 million subscribers. It expects to have 2.8 million subscribers by the end of this year. In comparison, Sirius Satellite Radio (Nasdaq: SIRI ) in February raised its projections to 1 million subscribers by the end of 2004, due to an agreement with RadioShack (NYSE: RSH ) and EchoStar Communications (Nasdaq: DISH ) .
If anything is particularly heartening about today's news, it's the idea that despite the lack of the holiday bump that it had back in December, XM is still proving a strong lure to consumers. What could be helping is the fact that XM is factory-installed in more than 80 2004 car models.
With the economy brightening, the fact is that XM could be taking off with the pent-up demand for new wheels. And summertime road trip radio could spread the word about the cool factor of the service. Also, consumers who might not otherwise consider the medium might get a taste of XM later this year when it becomes available to passengers of JetBlue (Nasdaq: JBLU ) and AirTran (NYSE: AAI ) .
Meanwhile, there are certain factors at work that, of course, could alter the landscape for satellite radio at large, including FCC-mandated changes. While Sirius is lagging XM, the possibility that the runt of satellite radio could sign Howard Stern for unfettered naughtiness has been discussed as a possible catalyst for a shift in subscriber choices.
This year is a crucial one for the future of satellite radio. The word is out, and this is the year when all of us are more likely to encounter someone who has it, has heard it, or is considering getting it. And when it comes to momentum powered by word of mouth -- the best advertising of all -- XM's growing subscriber base still places it ahead of the game.
What do you think? Can XM hit its subscriber goal by the end of 2004? If you're a Sirius fan, why do you think it will become more of a contender? Talk to other interested Fools on the XM Satellite Radio and Sirius discussion boards, here on Fool.com.
Alyce Lomax does not own shares of any companies mentioned.
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