XM Satellite Radio (NASDAQ:XMSR) is making all the right moves to become as ubiquitous as possible. The provider of 100 stations of satellite radio for $9.95 per month announced XM Direct today.
XM Direct is a universal tuner that can be connected to any satellite-ready radio through a digital adapter made and sold by third parties. XM's "open operating system" allows any third party to develop a wide variety of adapter cables for the automobile radio aftermarket and the original equipment manufacturer (OEM) market, increasing XM's potential customer reach without increasing its costs.
XM already has a portable satellite radio adapter for the car, as well as, of course, satellite radio models, but "with XM Direct and smart digital adapters, automobile dealerships and retailers can now satisfy customers who want to listen to XM through their in-dash stereo, regardless of vehicle or car stereo brand," according to Dan Murphy, Senior VP of product marketing and distribution at XM.
Murphy has one of the more important jobs at the company, working to widen the reach of a new brand and service while competing against an extremely similar product offered by Sirius Satellite Radio (NASDAQ:SIRI). Both competitors have struck deals to put their radios in cars on the factory line. XM partners include General Motors (NYSE:GM), Honda (NYSE:HMC) and Honda's Acura.
Through XM Direct, third parties have already created adapters allowing XM to work with Mini and BMW models, attacking Sirius's existing factory agreement with BMW.
XM has taken a clear lead over Sirius in the early going, surpassing 1 million subscribers this month to Sirius' 150,000. Both companies are naturally losing money as they build services and market aggressively, but with a duopoly granted by the government (it only sold two licenses for satellite radio), the eventual winner of this race should possess an attractive business model of recurring, growing revenue and steady costs.
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