Apple Now Challenges Sirius XM Radio

Apple's (NASDAQ: AAPL  ) mid-September launch of iTunes Radio was seen more as a threat to Pandora (NYSE: P  ) than to Sirius XM Radio (NASDAQ: SIRI  ) , but that may be about to change. Apple's streaming radio platform is about to take a newsy bent, as Re/code is reporting that National Public Radio will be the first news station on iTunes Radio.

Re/code says that there are "more on the way," suggesting that Apple's about to beef up the spoken, non-music content on iTunes Radio.

The arrival of iTunes Radio wasn't supposed to have an immediate impact, but Pandora has gone on to post sequential declines in usage in two of the six months since its launch. Sirius XM experienced a dip in total subscribers during the fourth quarter, but that masked a healthy sequential increase in the more important self-pay subscriber metric.

The moral of the story until this point is that there is enough market share to go around. Pandora and Sirius XM continue to reach broader audiences despite the stateside arrival of Spotify in the summer of 2011 and tech giants throwing their hats into this niche over the past two years. However, since Apple's iTunes is the golden standard of listening and purchasing digital music, the introduction of iTunes Radio six months ago is something that couldn't be ignored.

As a free, ad-supported music discovery platform, Sirius XM didn't have a lot to worry about. Its music channels are commercial-free, and it also offers a wide range of talk, sports, and news content that often stars some pretty magnetic radio legends. Pandora's move to add comedy three years ago was smart, but Sirius XM continued to post subscriber increases every quarter until this past holiday quarter (and Sirius XM's guidance calls for it to resume its winning ways right away). 

Right now, it may not be such a big deal. Sirius XM does offer NPR Now, but it's not just Apple's iTunes Radio offering a free stream that mixes live news with pre-recorded shows. NPR is available for free online, so it's not as if it's the one thing keeping Sirius XM subscribers as paying active listeners. The real challenge here will come in what Apple iTunes Radio offers next. If radio personalities begin to flock to Apple's nascent yet popular iTunes Radio, it could pose threats to terrestrial radio operators and possibly even Sirius XM. When you pair up the broadening content on iTunes Radio with its CarPlay initiative to get its technology in more cars, it's hard to dismiss Apple here.

Sirius XM can still continue to thrive if Apple is successful, but it'd better hope that iTunes Radio doesn't become too successful.

Are you ready for this $14.4 trillion revolution?
Let's face it: Every investor wants to get in on revolutionary ideas before they hit it big. Like buying PC maker Dell in the late 1980s, before the consumer computing boom. Or purchasing stock in e-commerce pioneer Amazon.com in the late 1990s, when it was nothing more than an upstart online bookstore. The problem is, most investors don't understand the key to investing in hyper-growth markets. The real trick is to find a small-cap "pure play" and then watch as it grows in EXPLOSIVE lockstep with its industry. Our expert team of equity analysts has identified one stock that's poised to produce rocket-ship returns with the next $14.4 TRILLION industry. Click here to get the full story in this eye-opening report.


Read/Post Comments (15) | Recommend This Article (2)

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 24, 2014, at 4:28 PM, 67vair wrote:

    Will Apple in the car be a continuous connection and nationwide like Sirius?

  • Report this Comment On March 24, 2014, at 4:30 PM, Austin77478 wrote:

    Come up with something better! You succeeded in catching my attention with your headlines, though!

  • Report this Comment On March 24, 2014, at 4:36 PM, twolf2919 wrote:

    @67-vair,

    iTunes radio uses cell or wifi, so yes - it is obviously nationwide - and as "continuous" as one can get with cell phone reception.

    A couple radio stations I listen to (NPR and Bloomberg) already have apps that do pretty much the same thing, but it would be far more convenient if all these stations were simply part of iTunes Radio rather than individual apps (much easier to channel jump).

  • Report this Comment On March 24, 2014, at 4:47 PM, 67vair wrote:

    If it uses cell or wifi, then it is subject to drop outs while driving. Correct?

  • Report this Comment On March 24, 2014, at 4:48 PM, Austin77478 wrote:

    twolf2919-

    I guess what 67vair is trying to say is that, can you drive cross towns, states without interruption (buffering) with Apple right now?

  • Report this Comment On March 24, 2014, at 5:02 PM, Varchild2008 wrote:

    I only have to travel a few miles up north and Cellphone connection even on Verizon ceases.

  • Report this Comment On March 24, 2014, at 5:48 PM, bobsar49 wrote:

    internet in your car only works as well as cell phone in your car. Like most things internet it sorta works but never ever lives up to the hype.

    You can't drive most places and hold a cell signal enough to listen to a ball game or news report. I live in well connected Boston. A fully connected car in NY would work great but who drives in NY? Maybe its for cabs.

    Look at a cell data map. Not so hot but maybe some day.

  • Report this Comment On March 24, 2014, at 6:21 PM, sirifair6 wrote:

    Rick,

    It is true that apple is making headway in its nascent "radio" endeavor. But these are baby steps of a company where “radio” is fifty fifth priority. Apple’s true music completion has been and remains its i-pod that is the most personalized music list there can possibly be because we put it together by and for ourselves.

    Those who know Sirius’s business well enough understand that siri's true domain is the auto. I have heard for years a lot of stories and insinuations how gravely siri is threatened in the auto by pandoras, apples and googles of the world. So far these threats have never materialized. Siri’ caravan keeps marching…

    Let us not forget that today siri can offer anything others can plus phenomenal satellite radio that took over a decade to put together. To claim that others can do it faster is preposterous. Let us not forget that Sirius, unlike any of its so called competitors, OWNS its infrastructure both on land and in space. Let us not forget that, unlike all of its competitors put together, Sirius owns tons of its content.

    To conclude, I have heard for a decade zillions of tall stories about competition first stalling and then destroying siri's business. Never happened and will unlikely happen in the foreseeable future. All this periodic build up of nightmares about siri's death is for fools and/or ignorant. Today, the company is experiencing the best time in its existence with much better times still ahead. Siri is not sitting on its laurels but is working as hard as ever to maintain a gap measured in many years with its so called competitors. The company has huge support from liberty and has the strongest revenue-fcf margins in its industry. It has more than enough experience, tools and now money not only to blossom but to stifle any competition, be it apple or pandoras.

  • Report this Comment On March 24, 2014, at 6:58 PM, SouthernBeach wrote:

    The only challenge that Sirus has is John Malone, and the Wimpy Sirus Board that doesn't care about the Shareholders. They want to keep their Cushy Board Seats and do whatever John Malone tells them. Just my thoughts.

    PS: Based on what has gone on for the past year, evidentially Mel did a much better Job with Sirus than the Present Management, and Board..

    It won't happen, but I wish Apple would buy everything that John Malone has and Boot him out.

  • Report this Comment On March 25, 2014, at 8:06 AM, twolf2919 wrote:

    @67vair, @Austin774778,

    You're right, of course, that it's not as continuous as satellite, but does it have to be in order to be successful? My parents in NC have had some health issues and I drove from NJ down I-95 a couple times recently. I listened to both the Bloomberg app and iTunes Radio stations on my iPhone for several hours each time. Yes, there were the occasional drop-outs - maybe once an hour? - but they lasted just a few seconds. That's pretty good in my book - especially when it's *free* (well, as free as your data plan allows it - I'm grandfathered into unlimited with AT&T - but radio streaming uses relatively little bandwidth).

    Yes, Sirius wins hands-down if compared via the quality of the in-auto experience. But once you take other factors into consideration - like price, ability to keep on listening once you exit the car, integration with your other media on your phone, etc. - then the decision is not so clear-cut. For my casual use case (during commutes and, sometimes at my desk at work), iTunes Radio is far and away the better choice.

  • Report this Comment On March 25, 2014, at 8:48 AM, nvisco wrote:

    In my opinion - at the risk of repeating someone else's comment that I may have missed - the benefits of SiriusXM (which both of my cars have) are:

    1 connectivity without data charges (my daughter routinely slides by her monthly data using Pandora incurring added costs)

    2 content ownership (even if Howard Stern goes away they have a formidable scope of solid formats and name personalities)

    3 cars already have a radio and most now include SiriusXM options, where Apple is late to the game (I had commented years back that I didn't understand why Apple hadn't done an in-car iPad version)

    For the record, I am long SIRI.

  • Report this Comment On March 25, 2014, at 10:36 AM, nofoolingforme wrote:

    I was driving in the mountains last week, 600 miles from home, listening to some of my favourite SIrius stations. There was absolutely no interference of dropped signals.

    There really is no other provider who can compete with the service and the unmatched variety of entertainment. It will take an enormous effort and cost, for anyone to come close to matching what Sirius as to offer.

  • Report this Comment On March 25, 2014, at 11:41 AM, dannysboy wrote:

    Yesterday, former Pres. Carter, educated as an engineer, informed the world he was sending all important communication by hand written mail.

    He no longer trusts is e-mail or phone are secure.

    I too have changed my habits regarding the internet.

    When it come to radio listening, I will stick to SiriusXM or terrestrial. That way I know nobody is listening to, or observing me.

  • Report this Comment On March 25, 2014, at 11:50 AM, RainierWrangler wrote:

    As has been noted in prior comments, if someone streams 60 minutes of audio each day it uses about 2 GB/month of data. That would cost most people an incremental $10+/month and what they are getting is substantially less than what Sirius provides.

    The "myth" of iTunes, Spotify, Pandora etc. being FREE is just that, a myth until and unless there is ubiquitous free high-speed internet available in the car.

  • Report this Comment On March 27, 2014, at 8:29 PM, blade3colorado wrote:

    These comments have more important information than this column did, e.g., the "REAL cost of of so called free radio, inconsistent or dropped data streaming resulting in poor listening quality, etc.

    ITunes, Spotify, Pandora and terrestrial radio are all inferior to SiriusXM radio.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2887905, ~/Articles/ArticleHandler.aspx, 9/19/2014 4:04:27 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement