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Can Apple Save Sirius XM?

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One of the nuggets during this morning's Sirius XM Radio (Nasdaq: SIRI  ) conference call is that the satellite radio operator will roll out its own streaming solution for Apple's (Nasdaq: AAPL  ) App Store next quarter. That helps explain why a highly anticipated third-party program was mysteriously shelved last month.Sirius XM's program would allow iPhone users -- and iPod touch owners with Wi-Fi connectivity -- the ability to stream satellite radio. 

It's about time!

The App Store presence would not only be a welcome addition to existing satellite radio accounts, but also allow Sirius XM to reach out to radio fans who aren't active subscribers. The company would naturally charge those users a premium for access -- but investors should keep their enthusiasm in check.

Yes, having "Apple" and "Sirius XM" in the same sentence is exciting, but the grim reality is that few iPhone -- and even fewer iPod touch -- owners will pay to stream Sirius XM. After all:

  • Music discovery sites like Pandora and Slacker have had free streaming apps for months.
  • Time Warner's (NYSE: TWX  ) AOL Radio offers a global smorgasbord of local radio stations.
  • Last.fm, owned by CBS (NYSE: CBS  ) , offers a surprisingly deep catalog of genre-specific music.
  • These portable devices have built-in iPods, so owners already have access to free podcasts, and they've likely loaded their entire music collections through iTunes.
  • iPod touch owners can only stream when they are tethered to Wi-Fi connectivity, making it less likely for them to pay for a premium subscription service that only works in stationary conditions.   

This is why the app's true benefit would be in keeping the company's churn in check. Subscribers would see more value in keeping their accounts active, given the multipurpose attraction of streaming online. That approach has worked swimmingly for Netflix (Nasdaq: NFLX  ) .

Sirius XM can use the extra carrot. Churn rates inched higher this past quarter, and new car buyers aren't paying for satellite radio once their free trials run out at the conversion rate they used to. The company has also been bleeding retail subscribers for a couple of quarters now.

The faltering economy can be blamed for the negative trends, so it's important to see if they reverse as the climate improves. Either way, having an iPhone app -- one that clearly will be quite popular -- couldn't come at a better time for Sirius XM.

More news than static on Sirius XM:

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Apple and Netflix are Motley Fool Stock Advisor picks. Try any of our Foolish newsletters today, free for 30 days

Longtime Fool contributor Rick Munarriz subscribes to both XM and Sirius. He does not own shares in any of the companies in this story, save for Netflix. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.


Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On March 12, 2009, at 1:08 PM, spamtheseal2 wrote:

    Doesn't this sound like Sirius is just trying to release a press release that has both SIRI and APPL in it?

  • Report this Comment On March 12, 2009, at 1:13 PM, asm610 wrote:

    Rick,

    "but the grim reality is that few iPhone -- and even fewer iPod touch -- owners will pay to stream Sirius XM. After all:

    Music discovery sites like Pandora and Slacker have had free streaming apps for months. "

    Once a gain you just don't get it! EXCLUSIVE content only available through SIRIUSXM, is what will drive new subs with the iphone app! I am able to stream Pandora and use it.....as a suplement to my SIRIUSXM subscription which I also stream on the internet when not in my car or listening with my portable XMP. There is NO contest as far as winning subscribers here...SIRIXM has entertaining exclusive content and sports....and is my favorite....along with the other 19 million folks who have it..including you! That is why it puzzles me when you seem to go out of your way to try and put negative info into your articles. Pandora and Slacker ...in truth.....are not competition for SIRIUSXM, and for you to even suggest they are is just wrong! Opinion is best kept to ones self!

  • Report this Comment On March 12, 2009, at 1:18 PM, drewsands wrote:

    Fools have no clue. It is in the content. Name one popular celebrity that has a show on TV primetime that is on Pandora and Slacker. I would rather listen to 1010 wins AM then Pandora and Slacker.

    Fool's still talking about this penny stock. Man there are desperate. myabe they need some content. If you can't beat them join them. Get a channel before someone else does. Maybe on the comedy channel.

  • Report this Comment On March 12, 2009, at 1:30 PM, drewsands wrote:

    One other thing all cable and dish providers have digital music with tons of music. The idea is what do you get when roaming the world. Sirius Rules. Fool's get out of your box.

    The future Wimax and 4g tech will cost a lot more then Sirius. I pay $80+ for 3g that I can't even get most of the time in rural areas and never (In my lifetime) in beween rural towns that will never happen. Sirius always rock. Sirius Up 25% today.

    Fool's have anything up like this or even the last 5 days. Your answer NO.

  • Report this Comment On March 12, 2009, at 1:42 PM, DeerHunter73 wrote:

    Drewsands i do agree with you 100% I do have siri shares also. But to anser i have about 40 stocks in my watch list up that much and a few more then that in the last week lol.

  • Report this Comment On March 12, 2009, at 1:42 PM, Sirihill wrote:

    Well, I have an Iphone and I will certainly buy it!

    I can't wait until they have sirius streamed to my treadmill...oh wait, I can listen to my Iphone via my treadmill connection so wow, I will have sirius too!

    Lots of possibilities! Hey health clubs are you listening?

  • Report this Comment On March 12, 2009, at 2:12 PM, McNabRanch wrote:

    Very good deerhunter.....your wisdom is second only to Aristotle's......too bad you don't get paid with shares of website hits.....

  • Report this Comment On March 12, 2009, at 2:24 PM, winterface2 wrote:

    You forgot there's also www.Radio.sc a huge up and coming streaming radio site that will put even more pressure on Satellite Radio.

    The trick will be coming out with portable devices that can just stream internet radio anywhere, I know I'd be first in line ditching all the stupid little AM/FM radios attached to various objects in my house.

  • Report this Comment On March 12, 2009, at 4:29 PM, XMFMitten wrote:

    There already is a device that streams Internet radio: the Slacker Portable. I have one. You set up the channels you want at slacker.com (you can program your own stuff and/or pick from a whole bunch of preprogrammed channels), and then you put your Slacker player in range of a Wi-Fi connection and let it upload. It caches your music, and you can refresh the device anytime you're within Wi-Fi range. It can store up to 8 GB of music, and you can program up to 40 channels.

    I ditched XM ages ago, when they began dumping a lot of their niche channels, and I haven't listened to music on terrestrial radio in years. Why would I want to listen to someone else's programming and wait around to hear a song I *may* like, when I can be in complete control of what songs and artists I listen to? This is why MP3 players are so popular, and it's also why I think devices like the Slacker Portable will catch on.

    Sirius just continues to desperately flail around, trying to remain relevant, with moves like this. Assuming the music on Sirius isn't the draw it once was, with the popularity of MP3 devices that put you in the driver's seat, are there *really* that many people willing to pay a monthly subscription just to hear a few exclusive talk shows -- especially in this economy?

  • Report this Comment On April 30, 2009, at 4:49 PM, tommydawg wrote:

    You can already stream Sirius at least (not sure about XM), with Pocket Tunes. Search for it on the App Store. Costs $9.99 in the U.S. and Canadian store. I've had it working for about a month now. After you open it, it loads up the available stations (takes maybe 10 seconds or so at 3G speeds), then go to the web by pushing "web" at the bottom of the app, load up the web page at www.sirius.com, click on "listen online", and sign in as you normally would do if on a computer. After logging in it takes about 15 seconds to load the station you want and buffer it, then the streaming begins!

    You can save that as a favorite, so you never have to go through the login again. Just click on "favorites" at the bottom of the app to log back on to Sirius the next time. It has worked great for me so far. It only disconnects if the subway goes underground. I've had one or two stutters while walking around on the street on a near daily basis, and I have yet to lose the signal until I got all the way down to the subway platform, I'm sure that is due to the buffer as some are about 5 levels down or more.

    I have yet to get more than 4 hours of continuous listening without draining the battery, but while plugged in at work, the battery recharges fully in about an hour, even while listening. Even if the Sirius one ends up costing less or is free, it has been so worth it for the month so far, plus however long it takes until the "real" one comes out.

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