Is Ford's Gain Sirius XM's Pain?

You have to love Ford's (NYSE: F  ) problem -- or at the very least the automaker's fix to the problem.

MyFord Touch -- the company's state-of-the-art infotainment platform -- has no shortage of critics. Car reviews haven't always been kind, knocking MyFord Touch as being complicated, buggy, and slow to respond.

Unlike the costly recalls that often take place when a piece of hardware is defective, Ford should be able to remedy MyFord Touch's shortcomings with a software upgrade. It plans the update early next year, and mailing out flash drives, offering user downloads, or asking users to stop by the dealer should do the trick.

The push to entertain drivers without distracting them -- or at the very least appear to offer more high-tech candy than showroom rivals -- has to be making Sirius XM Radio (Nasdaq: SIRI  ) nervous. Revenue has only grown 6% over the past year, and the last thing it wants is the dashboard to get even more crowded. Competing against terrestrial radio is an easy marketing proposition, but life gets harder as the growing number of smartphone-owning drivers get behind the wheel of cars with seamless Bluetooth integration.

Garmin (Nasdaq: GRMN  ) has already felt the pinch of drivers with smartphones. GPS units aren't selling the way they used to, leaving the company to lean on fitness, outdoor, marine, and aviation for growth. It hasn't been enough, as growth in all four of those categories wasn't enough to offset a 13% decline in automotive in its latest quarter.

Is Sirius XM the next Garmin?

It's a fairer comparison than you may initially think. Folks are paying through the nose for their smartphones, so why should they pay for nuvi GPS systems and pay to keep them updated? By the same token, with at least three major carmakers now promoting access to Pandora (NYSE: P  ) streaming, will smartphone owners feel compelled to pay $12.95 a month -- or $14.49 a month next year -- for Sirius XM? After all, Ford is now perpetually sending out software updates that make its Web-tethered product better and better.

Well, if there's one saving grace for Sirius XM beyond its ability to afford proprietary content, it's that hungry automakers rely on Sirius XM to share the revenue of activated receivers. Sirius XM has even been able to strike deals with automakers to promote satellite radio in their pre-owned cars. In other words, while there's an incentive to give consumers what they want by making cars smarter, the last thing that automakers want to do is slay satellite radio.

Sirius XM 2.0 will be a big part of the satellite radio giant's response, and it too will lend itself to software upgrades to keep up with the ad-supported Joneses. Dashboard technology may be a threat to Sirius XM right now, but it will also ultimately be an opportunity.

If you want to see how Sirius XM stands up to the stream teams, add Sirius XM Radio to My Watchlist.

Longtime Fool contributor Rick Munarriz calls them as he sees them. He does not own shares in any of the stocks in this story, except for Ford. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.

The Motley Fool owns shares of Ford Motor. Motley Fool newsletter services have recommended buying shares of Ford Motor. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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  • Report this Comment On November 08, 2011, at 11:06 AM, rockotodd2 wrote:

    but won't most Smartphone users pay more than $14 if they go over their data caps to stream more pandora or whatever they are supposedly listening to instead of Sirius?

  • Report this Comment On November 08, 2011, at 11:09 AM, Billiardman wrote:

    There is one small item you left out that puts the kabash on your theory. Pandora requires an internet connection. Most smartphones, even the iPhone, do not allow teathering for free. Verizon and AT&T charges $25 per month for the service. And with that it is capped. Not to mention that Pandora will have to charge eventually or go bust. Since they have a failed business model. I would prefer simply using an iPod or iPhone and just play my own music. But that's assuming you don't want live content, which Pandora does not provide. Sirius is now profitable, in almost every vehicle and here to stay.

  • Report this Comment On November 08, 2011, at 11:14 AM, BullMarket75 wrote:

    Rick, certainly you know by now that Sirius also has their music service streaming over the internet.

    Once again, it all comes down to content and nothing touches SiriusXM. I love using their app on my iPhone! I get all that great content wherever I go. Pandora is just jukebox music with advertisements. No sports, talk radio, etc!

    Over the long term SIRI wins!

  • Report this Comment On November 08, 2011, at 11:55 AM, dubyaisafairy wrote:

    SIRI is in a league way above P...not even close.

    ...besides, smartphone mp3 streaming is piss poor sound quality, and if you want that sort of thing SIRI does it better with their app anyway. I used to think these SIRI shorter stock manipulation attempts were a bunch of bs, but with this lame excuse for an "informed" article I see now it's real.

    ...dream on SIRI shorter & P promoter!

  • Report this Comment On November 08, 2011, at 7:38 PM, artstudio1 wrote:

    Sirius XM Radio versus Pandora is like comparing a slice of American Apple Pie (Sirius) to a pile of dog @#$%^& (Pandora). There is NO comparison! Sirius XM has major content like NFL, NHL, College Sports, Howard Stern, Martha Stewart, Oprah Winfrey, etc. Pandora only offers song comparisons. PLUS Pandora needs an Internet and/or cell phone connection and if you can't get either which happens all the time then you are S.O.L. Sirius gets a signal anywhere in the world via satellite, wi-fi, or Internet connection. ENOUGH SAID! Sirius WINS easily!

    PS: Please do us a favor and quit trying to manipulate stock prices with garbage articles.

  • Report this Comment On November 09, 2011, at 3:20 PM, kmacattack wrote:

    Looks like your admirers are few, Rick, and with good reason. Pandora sucks, period. There is going to be a huge glut of DEMAND and not that much more supply of BANDWIDTH which will hurt Pandora and other internet based radio. There are going to be more and more carriers putting restrictions, and huge fees, on bandwidth usage, which SIRI won't have to deal with. And, the most impressive reason that SIRI will continue to grow, and with every new subscriber will increase profit dollars and margin percentages is THE ABSOLUTE BEST CONTENT AVAILABLE. PERIOD. I just bought back in SIRI a week ago after stopping out my SIRI shares when the TEA PARTY CRASH occured, at a nice profit of about 70 percent in a year's time, plus some very nice profits on options to boot. Siri is the KING OF THE HILL.

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