Is Apple's New Toy a Sirius XM or Pandora Killer?

Apple is rolling out CarPlay, and it's more than just a play on cars.

Mar 3, 2014 at 1:04PM

Apple (NASDAQ:AAPL) is hoping to make its iOS products more attractive to drivers, and that could be bad news for Pandora (NYSE:P) and Sirius XM Radio (NASDAQ:SIRI).

The consumer tech giant introduced CarPlay this morning. The platform makes it easier for drivers to engage with their iPhones without having to take their eyes off the road. They can make phone calls, check voice mails, and pull up directions by simply pressing a steering wheel button and calling up Apple's voice-recognizing Siri. It will be available this week for Mercedes-Benz, Volvo, and Ferrari drivers, but more than a dozen other car giants are already on board to roll it out soon.

How does this potentially trip up Pandora or Sirius XM? Well, naturally, CarPlay also makes it seamlessly easy to use an iPhone's flash memory or mobile connection for audio entertainment on the open road.  

"CarPlay gives drivers access to all of their music, podcasts, audiobooks and iTunes Radio with easy navigation through listening choices from the car's built-in controls or simply by asking Siri to pull up what you'd like to hear," Apple's press release explains. "CarPlay also supports select third-party audio apps including Spotify and iHeartRadio, so you can listen to your favorite radio services or sports broadcast apps while driving."

Pandora is surprisingly missing from the list of apps named. As the niche leader that served up 1.58 billion hours of content in January to its 73.4 million unique listeners shouldn't it be the first  of "select" third-party audio apps mentioned? In the end, it's clear that Apple's game here is to push its Pandora rival iTunes Radio on to more drivers. 

Sirius XM also can't ignore CarPlay. It's in the car, and that's where the satellite radio monopoly is primarily used by most subscribers. Apple also makes it a point to emphasize the ability to stream podcasts, audiobooks, and sports broadcast apps. In other words, it's not just a music play. CarPlay wants to turn your iPhone into your radio and that could weigh on Sirius XM as well as terrestrial radio. As great as Sirius XM is, it has increased its rates twice over the past three years despite programming costs per subscriber declining in that time. It may be susceptible to free or nearly free entertainment options that are just as easy to experience.

Now it's important to be realistic. Many auto manufacturers already have adequate, if not superior, in-car technologies in place that allow drivers to engage with their smartphone apps through their dashboards. Some brands have had this for several years, and both Pandora and Sirius XM continue to grow their audiences. 

It also bears pointing out that CarPlay is limited to the iPhone, unlike broader connection platforms that cover more mobile operating systems including the market-leading Android. It will be more crowded with companies trying to get you connected, but until Pandora usage starts to dip or Sirius XM's self-pay subscribers start to slide, it's not worth getting worked up about CarPlay.

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Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Apple and Pandora Media. It also owns shares of Sirius XM Radio. 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.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't 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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