Sirius XM Tunes Out the iPhone

By Rick Aristotle Munarriz
February 27, 2009 | Comments (17)

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Satellite radio fans, prepare for another brutal blow. The uSirius StarPlayr app for Apple's (Nasdaq: AAPL) iPhone, which has been in development since last year, apparently won't hit the market anytime soon.

"As of yesterday, the uSirius StarPlayr Application for iPhone still had a status of In Review with Apple," explains app developer NiceMac on its site. "Late last night, we became aware that the application could not be approved at this time."

"As fans, we are committed to continuing to work with all parties involved as necessary in any capacity required to see this product to market. It is our goal, as it has always been, to release this application at as low of a price point as possible, if not free of charge."

Dissed app, disappointment
Since Sirius XM Radio (Nasdaq: SIRI) is apparently in no hurry to put out its own player for the iPhone or Wi-Fi-enabled iPod touch, interest has been swelling for NiceMac's solution.

Why did Apple nix the program, which would allow existing Sirius and XM subscribers to stream the satellite radio provider's online channels? It's not as if the App Store is a hotbed of highbrow utilities. Some of the more popular downloads at the moment include a "That's what she said" soundbite button, and a life expectancy calculator with its own countdown clock. In that light, what's so objectionable about satellite radio?

And if Apple's not to blame, could the intereference here come from Sirius itself?

Stream a little stream
The iPhone is no stranger to Internet radio. Some of its more popular free offerings include Pandora, Slacker, CBS' (NYSE: CBS) Last.fm, and Time Warner's (NYSE: TWX) AOL Music.

One can argue that Sirius XM doesn't want to be lumped in with entirely free content. Before the merger, XM and Sirius were striking deals with wireless carriers for premium streaming services. Last year, for instance, XM struck a deal with Research In Motion (Nasdaq: RIMM), in which BlackBerry owners could pay $7.99 a month for access to 20 XM channels.

In other words, Sirius XM sees smartphones as another revenue stream, instead of a retention tool. Netflix (Nasdaq: NFLX), on the other hand, wisely decided to make its online video service free to existing subscribers, which has successfully kept them from straying elsewhere.

Sirius XM is actually flipping the Netflix playbook upside-down. It wants to command an online premium for Web streaming, even as its competition is more than happy to roll out free, mostly ad-supported platforms.

In short, Sirius XM's strategy is wrong, cocky, and a recipe for disaster.

What does Sirius XM want to be when it grows up?
Sirius XM has been able to ignore its retail weakness because it's still an auto-showroom belle. Car companies continue to install satellite receivers in their new vehicles, hoping to collect a piece of the action if drivers eventually pay for satellite radio.

I've never heard the company deliver concrete numbers on how its deals with wireless providers have panned out. But I've also never met an actual wireless-only subscriber. Have you?

Sirius needs to realize that it's better off tearing down barriers, not building them. Between weakness in new car sales and a discretionary-income-draining recession, maybe this isn't the best time to hike rates on secondary accounts and charge subscribers more for Internet access.

Sirius XM expects to close out the year with reasonable subscriber growth, but I can't be the only one who won't be shocked if it ends 2009 with fewer listeners than it started with.

I am not suggesting that Sirius XM take down its costly satellites and become just another Web streaming company, but it does have to face reality. The company can milk its satellite radio model through automakers for a few more years, but in cyberspace, it'll have to play by a different set of rules. Instead of a walled garden, Sirius XM should be building brand equity in its proprietary channels by inviting free exposure. It can cash in on referrals for digital downloads through Apple, concert ticket sales through Live Nation (NYSE: LYV), and online ads. And even if the company doesn't want to spend time and effort on such a strategy, why not let third-party developers do the heavy lifting?

So what's the deal, Sirius XM? Are you the one holding up an anticipated app that would help further your cause? If so, change that channel, and fast.

Sirius-ly, we've got plenty of further Foolishness:

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Netflix and Apple are Motley Fool Stock Advisor recommendations. Try any of our Foolish newsletters today, free for 30 days.

Longtime Fool contributor Rick Munarriz is such a fan of satellite radio that he subscribes to both Sirius and XM. He does not own shares in any of the stocks in this story, save for Netflix. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.

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 February 27, 2009, at 3:33 PM, Paperboy2007 wrote:

    This is really a shame...I've been anxiously awaiting this app. As a company in dire need of cash, I don't understand why Sirius doesn't see the value in what could be a very nice revenue stream

  • Report this Comment On February 27, 2009, at 5:24 PM, 123ewq wrote:

    All I know is this web site has been 100% wrong with everything they've ever written about Sirius, this is no exception. I'm almost happy as a stock holder that they are actually speaking out against it. In Mel we trust, I'm already up money in '09, keep bashin MF please

  • Report this Comment On February 27, 2009, at 5:39 PM, riz2121 wrote:

    Its amazing how awful this website is! Do they try and think up meaningless garbage to keep bashing SIRI!?

    Ya looks like the market was real upset about the apps delay..

    In the worst recssion since the great depression SIRI continues to add subscribers while other companys are losing everything.

  • Report this Comment On February 27, 2009, at 7:11 PM, fish9483 wrote:

    Rick Aristotle Munarriz is an idiot. The decision was in Apples hands as he said. Is Rick angry because he has no money to invest in Sirius and everyone else around him is making money. Sirius close today at $.16. Wait till the 4th quarter announcement next week. Rick Aristotle Munarriz should find another horse to ride. This ones gonna kick him off.

  • Report this Comment On February 27, 2009, at 7:18 PM, Greatlks wrote:

    Wow, it amazing that this website is still here. I guess because of fools like myself come here to read what the funny paper has to say. You have never disappointed me yet, always bashing some stock, but for a long time SIRI has been on your list for some reason. Are you possibly shorting Siri or are there some other reason ? I agree they have some major hurdles to overcome. But, you never hear about the positives side. I guess Motley Fool is what it is, just another rag paper on the internet.

  • Report this Comment On February 27, 2009, at 7:18 PM, norenore wrote:

    It's really hilarious that pirates can stream anything they want (including Sirius/XM) to thousands of people across the net, for little cost, and have been for almost a decade.

  • Report this Comment On February 27, 2009, at 7:19 PM, splatt53 wrote:

    I'm hopping that the iphone app is only being delayed until March 11th. so Sirius can overhaul there Internet service. I'm sick of dragging a cord through the office every day to hear Howard. I also think it's strange that Sirius XM is not the company putting the app out.

  • Report this Comment On February 27, 2009, at 7:34 PM, mdis25 wrote:

    this company has kept this stock down because of things just like this, this stock has been kept down from the top we all can see that

  • Report this Comment On February 27, 2009, at 7:46 PM, smizerov wrote:

    Here's a really great app for Windows Mobile (Better than iPhone I think) XM, Sirius and 5000 internet radio stations. It's $25 but was worth it for me...

    http://www.selectradio.com/

  • Report this Comment On February 27, 2009, at 10:26 PM, drewsands wrote:

    This will not affect the stock at all. That app did not even work on a PC. SelectRadio rocks and Internet service is availible now but fools wouldn't know.

    They picked activision and look were that is at. Although now is a good time to buy, but anything is within reason.

    Fools are not adding subscribers Sirus XM is. They are probally just trying to short the stock.

    It will just follow the market for now and pop next week.

  • Report this Comment On February 27, 2009, at 10:39 PM, draland wrote:

    SOMETHING BIG IS COMING‏

    From: SIRIUS Satellite Radio (sirius@info.sirius.com)

    Sent: Fri 2/27/09 5:19 PM

  • Report this Comment On February 28, 2009, at 2:48 AM, MadMoney77 wrote:

    LOL I thought this website has a bit more sophisticated investors posting on it than google did. SIRI is garbage, and the stock would need to be upgraded just to get to that level.

    Everyone here that made some lame comment about Siri still adding subs needs to get a clue. ALL of the added subs in Q3 were new car sales. WOW, some new cars actually sold, so Siri was able to add some NON-paying subs for 6 months. I can't wait to go long Monday morning. Retail subs were NEGATIVE for the quarter, lets spin that to added subs.

    Last year approx 11m cars were sold. Siri claims 55% of new cars sold has one of their receivers in it. Thats 6.05m subs, all non paying for 3-6 months. That works out to about1.51m new cars sold in Q3 with Siri receivers in them. Siri reported adding something like 400-500 thousand subs for the quarter.

    Even if Siri claimed all subs counted were paying (Which they do not, they do count the promo subs), the math still doesn't add up to adding subs. 1.51m new cars with Siri receivers per quarter with Siri claiming 50% of the promo subs turn into paying subs, that is over 750,000 subs PER quarter, NOT 400-500,000 as was added.

    Siris balance sheet is all magic math, take a closer look at it.

  • Report this Comment On February 28, 2009, at 5:22 PM, majordm wrote:

    ==========================

    Were all of the above written by the same person? Cross check those IDs!!!!

  • Report this Comment On March 01, 2009, at 10:26 AM, draland wrote:

    SOMETHING BIG IS COMING‏

    From: SIRIUS Satellite Radio (sirius@info.sirius.com)

    Sent: Fri 2/27/09 5:19 PM

    Let's see, after all this stock has been heralded as a 'lottery' ticket by much more sophisticated investors' than all of us here..................no doubt!

    At this point with the staggering loses of most investors who went long this stock (foolishly or not) what's another several thousand dollars in order to cost average to pennies, and then possibly pull a save, if not more, in the good-old- Last-Minute Tradition of Tricky Mel !!

    We are already toast if it fails, however, strategically place a few more dollars at risk and you may laugh all the way to the Bank.............. (If it's still there!!)

  • Report this Comment On March 03, 2009, at 2:40 PM, CANSLIMnet wrote:

    qawegWERG

  • Report this Comment On March 03, 2009, at 2:45 PM, CANSLIMnet wrote:

    Sorry about that last test post... I meant to share my "Serious Example For Closer Study" article and audio clip from a 7/11/08 interview mentioning SIRI. You can access it without any hassle or cost via the "What's New" link at canslim.net if you so choose.

  • Report this Comment On April 28, 2009, at 4:47 PM, woobert wrote:

    FYI, you can listen to XM Radio on your iPhone or iPod Touch using the already available iPhone app ooTunes Radio 2.0. Buy it, run it, go to "websites" tap the XM Radio link, login, pick your station and listen! You can also bookmark it so you don't have to do all that first part over and over. ooTunes also has 7000+ regular radio streams built in, and it's only $4!

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