Buy a new Toyota (NYSE: TM ) , and you'll get three free months to kick the tires of XM's satellite radio service. However, with the Entune multimedia system that Toyota is unveiling during this week's Consumer Electronics Show, drivers with smartphones will now enjoy a whole slew of other options as well.
Entune offers owners of Bluetooth-capable phones some pretty nifty mobile apps that can be executed without fumbling with their phones. Voice recognition and in-vehicle controls power the following dashboard experiences:
- Microsoft's (Nasdaq: MSFT ) Bing provides navigation, with more than 16 million points of interest. Somewhere out there, Garmin (Nasdaq: GRMN ) is shedding a tear for every nuvi GPS box that will never be sold.
- Making restaurant reservations on the fly is a breeze with OpenTable (Nasdaq: OPEN ) , offering access to more than 15,000 foodie-friendly eateries.
- Dinner and a movie? Drivers can call up MovieTickets.com to pre-purchase movie tickets before pulling up to the multiplex.
However, the real features of Toyota's new platform that may keep Sirius XM Radio (Nasdaq: SIRI ) up at night are the musical ones.
The spirit of radio
You can't spell Entune without tune, and music is a major component of Toyota's multimedia system.
Terrestrial radio is no longer limited to nearby signals. Entune leans on Clear Channel's iheartradio app to stream more than 750 hometown stations. Yes, this is still largely the commercial-laden drivel that drove many satellite radio subscribers to pay for premium radio, but with hundreds of regional choices, it won't be long before even the most jaded audio connoisseurs find something worthwhile.
Entune also works with Pandora, the free music-discovery service with a larger established base than even Sirius XM.
Obviously, this isn't the end of Sirius XM. Anyone who has ever streamed Internet audio in their car knows the pitfalls of its tinny aural quality and buffering gaps. This problem will be rectified in the coming year or two, as speedier 4G and broader coverage make connectivity more seamless, but it's currently a drag on performance.
The nail in Sirius XM's tire
There's more to Entune's freebies than turn-by-turn navigation, reservations, and a ton of audio options.
Entune also delivers customizable real-time traffic, fuel prices, local weather, stock quotes, and sport scores. Some of these features are slighter versions of add-on services for which Sirius XM owners currently pay extra, or which are rumored to be included in the Sirius XM 2.0 upgrade later this year.
Expect quite the buzzkill if Sirius XM's ballyhooed features are already available earlier and cheaper elsewhere by the time the 2.0 upgrade arrives. Even General Motors' (NYSE: GM ) sleepy OnStar service is letting beta testers post audio status updates on Facebook and have their news feeds read to them while they drive.
For starters, Sirius XM has been inking exclusive content deals that drivers will never access without premium subscriptions. You won't find Howard Stern, Oprah Winfrey, or Martha Stewart on your radio without a satellite receiver.
In addition, the existing wave of in-car consoles hasn't hurt satellite radio thus far. MyFord Touch was also introduced during last year's Consumer Electronics Show, but Sirius XM has gone on to post sequential subscriber growth in each of the four following quarters.
Finally, Toyota, Ford, and the rest of the automakers have plentiful incentives to keep Sirius XM thriving. These companies aren't just installing receiver; Sirius XM pays the carmakers for active subscribers. Clear Channel and Pandora probably can't offer such tantalizing payments. Toyota is just giving drivers what they want, but it will continue to promote conversion rates for drivers after their free XM trials run out.
Technology may challenge Sirius XM's model -- especially as the company ponders rate hikes this summer -- but it won't drive satellite radio off the road.
Can Sirius XM and Entune co-exist? Share your thoughts in the comment box below.