Get Ready for a New and Improved Sirius XM

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Get ready for the second leg of the satellite-radio revolution. Sirius XM Radio (Nasdaq: SIRI  ) CEO Mel Karmazin is once again promoting the Sirius XM 2.0 platform, even though its release is more than a year away.

"Our next generation of satellite radios [is] expected to offer significantly more choices for the consumer and contain functionality that does not exist today in our radios," Karmazin said during last month's quarterly conference call, before explaining that the big changeover won't result in a significant cost increase. He also promised that the new receivers would hit the market in time for next year's holiday season.

Karmazin briefly brought up the new platform during Wednesday's Bank of America Media, Communications, & Entertainment Conference, where he once again reiterated the time frame for the release.

In the tech world, companies tend to announce an enhanced model as close as possible to the new gadget's actual availability. Just ask Apple (Nasdaq: AAPL  ) , whose swiped iPhone 4 prototype had the Cupertino giant calling the cops.

But protecting secrets isn't the only reason companies hold back. Many of them figure that hyping a new and improved model can stop sales of the current model dead in its tracks. This, however, isn't a problem for Sirius XM. Although it suffered a net reduction of 448,304 retail accounts through the first six months of this year, it's managed to grow its user base to a whopping 19.5 million subscribers and has more than made up for the retail shortfall through the number of cars that roll off the lot with preinstalled Sirius or XM receivers. Someone may avoid buying a portable satellite-radio receiver now that could be obsolete by next year, but a car buyer isn't going to think much about that.

What's so special about 2.0? Well, Sirius XM isn't saying much beyond promising broader content and greater functionality. However, a patent XM filed two summers ago clearly hints at what consumers may be getting.

The patent details a method for subscribers to generate playlists culled from content across several channels. A "thumbs up" and "thumbs down" button lets listeners cherry-pick the content they like and dismiss what they don't. This sounds a lot like TiVo (Nasdaq: TIVO  ) , doesn't it? Relying on a bank of data points to dish out recommendations is also a play out of the Netflix (Nasdaq: NFLX  ) playbook.

So Sirius XM wants to be the TiVo -- and the Netflix -- of premium radio. But the patent isn't just about music. If it were, Sirius XM would just become a more expensive Pandora clone without the smartphone buffering. No, the patent method also applies to news, sports, comedy, and talk shows.

Get it? Imagine a playlist where your favorite songs are mixed in with news that's relevant to you, along with scores from your teams and standup routines from your favorite comedians.

Now, we don't know whether this is what Sirius XM will offer, but if it's even remotely close to what reality brings, I can't help admitting that I described what I thought would be a potential satellite-radio killer a little more than two years ago.

"Cars with Wi-Fi-tethered storage retrieve customized content overnight," I wrote at the time, predicting that hard drives and connectivity would become more widely available. "An odd assortment of companies -- from Google (Nasdaq: GOOG  ) to your local newspaper to local terrestrial-radio stations -- populate your hard drive with news that matters to you. Content providers compete for your eardrums, so you can handpick things like Local Band Song of the Day, your favorite sport team's scores, entertainment news on only the celebrities you care about, and stock-specific quotes and news."

How cool is it that the Sirius XM killer I described may turn out to be Sirius XM itself?

Well played, satellite radio. Well played.

What would you like to see in Sirius XM 2.0? Share your thoughts in the comments box below.

Interested in reading more about Sirius XM? Add it to My Watchlist, which will find all of our Foolish analysis on this stock.

Google is a recommendation of Motley Fool Inside Value and Motley Fool Rule Breakers, and the Fool owns shares. Apple and Netflix are Motley Fool Stock Advisor recommendations. True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community.

Longtime Fool contributor Rick Munarriz is a subscriber to both Sirius and XM. He owns shares of Netflix and is also a member of the Rule Breakers analytical team, seeking out the next great growth stock early in its defiance. The Fool has a disclosure policy.

Read/Post Comments (12) | Recommend This Article (34)

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 September 19, 2010, at 3:07 PM, Fredlee009 wrote:

    "Although it suffered a net reduction of 448,304 accounts through the first six months of this year,"

    Tired of this sites "mistakes". Get an editor or a writer who knows how to write an article without butchering at least one fact almost every time.

    Sirius XM did not lose any subs this year, in fact, they have gained more than 600,000 subs so far in the first 2 Quarters. So your error is a 1 million sub error. Thats pretty large.

  • Report this Comment On September 19, 2010, at 5:29 PM, TMFBreakerRick wrote:

    Freedlee, that's the number of retail subscribers that it has shed during the first half of the year (where 2.0 should make a bigger difference). It was clearly more than offset by the OEM uptick -- as noted later -- but it's a point that should have been clearer. Let me try and fix that quickly.

  • Report this Comment On September 19, 2010, at 8:58 PM, 702nitro wrote:

    Very cool indeed. Hopefully you'll be able to login to and access your profile and create custom playlists(from the 1000s of available songs,shows, news, etc). From there it automatically syncs with your car unit, or handheld mp3 player. That way I can create a music list at home or at work, and be able to listen to it on the way home or on the way to work.


  • Report this Comment On September 20, 2010, at 10:21 AM, one85 wrote:

    All of this is Sirius has a new platform...big deal! They're also scrapping(in my opinion) one of the biggest draws they have. As of October, Sirius will no longer braodcast Opie & Anthony. They were the reason I and a few million other listeners bought XM Radio in the first place. I like what Sirius radio has to offer but, to me, it's not worth the money without this programming.

    What Howard was to Sirius, O&A were to XM. I never had any use for Howard Stern and now have no use for Sirius radio without O&A. So, they'll lose my subscriptions (3 to be exact) as well as 10's of thousands, if not a million, more. What good is a new platform with no one to listen.

  • Report this Comment On September 20, 2010, at 10:45 AM, Clayburn9 wrote:

    My only concern is the radios themselves. Will the current ones still work? I have a 2010 Ford that has one and a stilletto. Are they going to be obsolete soon?

  • Report this Comment On September 20, 2010, at 11:20 AM, kpscott wrote:

    If the legacy hardware is obsoleted by the new platform, I can think of 19.5 million people who will not be happy with that.

  • Report this Comment On September 20, 2010, at 3:02 PM, Daoasis wrote:

    Sirius's long term forecast is not good. With LTE networks rolling out around the country and access to any song at any time through smart phones and connected cars, there is no future for Sirius. It's a matter of time.

    They have a good service but at a premium cost. They will not be able to compete with the offering of 3G or 4G. Their announcement only confirms that they know where their weaknesses are, unfortunately theirnresponse is too little and too late.

    If Apple or Google were creative enough, they would bring Stern over to the Cloud and make the streams accessible through their OS's. Apple is too family oriented but Google has the cash and the resources to make it happen.

    Sirius wii be a fond memory 3- 5 years from now.

    I have owns lots of Apple stock for the past 3 years and have no interest in either Google or Sirius.

  • Report this Comment On September 21, 2010, at 8:29 AM, johnnyelectron wrote:

    3G or 4G costs a freakin' fortune per month to stream music, you run over your data limit on their "so-called" unlimited plans that are not unlimited. I hate the cellphone companies, their lies, their long contracts, not to mention poor audio quality. Sirius / XM can and does offer decent audio quality AND their service is under $13 a month - can you get cellphone service for under $13 a month? Can you even add data to your cellphone for under $40 a month? I didn't think so. Music, sports, talk, comedy - all on one radio for less than $15 a month - my money's on Sirius / XM radio, not the hellphone companies.

  • Report this Comment On September 21, 2010, at 8:46 PM, dstnewman wrote:

    Hmmm, where have I heard this before?

    Oh yeah, I wrote basically the same article... over 3 weeks ago.

    I guess that means I agree with you Rick. =)

    Brian "Newman" Rayl

  • Report this Comment On September 24, 2010, at 12:43 PM, bluedand wrote:

    We bought a car 3 weeks ago and as silly as it may sound, it was the satellite radio and USB plug that made the choice. We were looking at Honda and Ford...went with Ford.

    My only concern was expressed above...what happens with the expensive system in my car if the new service won't "fit"? If it requires an expensive retrofit, forget it...but that could also be good marketing...force us to buy a new portable device to plug into the but not a happy camper.

  • Report this Comment On September 24, 2010, at 12:46 PM, dwatson102 wrote:

    I received a survey from XM a few weeks ago asking what I wanted in content from them next. Choices were vast and included audio and video. With the direct broadcast satellites they have and improving didgital compression techniques, the possibilities are limitless. I do use Pandora on my Blackberry sometimes but I stream Sirius more often on that box especially when working around the yard because of the news/talk/comedy/sports that is not available as easily anywhere else. Who are O&A anyway?


  • Report this Comment On September 24, 2010, at 12:48 PM, dwatson102 wrote:

    There is absolutely now way Sirius can abandon 19 million legacy receivers especially since a bunch of them are built into aircraft avionics systems. I would not worry at all about that.


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