In the latest attempt to cash in on the digital-music craze, Sirius Satellite Radio (NASDAQ:SIRI) recently announced that it will introduce a small portable device for its radio service that can digitally store 50 hours of programming from Sirius channels.
The device, called the S50, will be Sirius' first device that can be used outside an automobile. The wearable S50 will have a suggested retail price of $359.99.
This announcement comes just a month after Korean manufacturer Samsung Electronics announced that it is producing a similar device that will store programming from rival XM Satellite Radio (NASDAQ:XMSR).
In my opinion, Sirius is barking up the wrong tree. Rather than consistently lagging behind XM, Sirius should be focusing on its core business by attracting new customers through improved programming.
By entering into the digital music market, Sirius will have to face competition from Apple Computer (NASDAQ:AAPL), Creative Technologies (NASDAQ:CREAF), and a host of other strong, established companies. The price tag of $359.99 also seems a little prohibitively steep for its features, especially when compared to the omni-functional PSP by Sony (NYSE:SNE), which retails for $250, or Apple's 20GB iPod, which goes for $299.
With XM leading Sirius' subscriber base by more than 2-to-1, XM is certainly in a position to explore such ventures. Even so, it has taken the wise approach of entering this segment of the industry with an experienced partner like Samsung. Sirius, on the other hand, is not yet in a position to take on this sort of competitive risk, and it has chosen to do so without a partner.
This seems like a classic case of misplaced priorities. Sirius would do better to let this one go and divert its resources to attracting the customers it needs to stay in the main ring.
Fool contributor Tarek Sultani is a complete technophile. He does not have a financial interest in any of the companies mentioned in the article, although he does love his PSP. The Fool has an ironclad disclosure policy.
