We're already waist-deep in June, and Sirius XM Radio
"We are also confident that we will be launching an application for the Apple iPhone and iPod Touch before the end of the second quarter," CEO Mel Karmazin noted during last month's conference call.
With just two weeks left in the quarter, the clock is ticking.
The release of the app couldn't come at a better time. The satellite radio operator lost 404,422 more subscribers than it gained during the first three months of the year. Approximately 300,000 of those departures result from a slowdown in automaker paid promotional trials, which should reverse once showrooms begin selling cars again. However, 300,000 is still less than 404,422, so Sirius XM is also losing its fair share of self-paying subscribers, too.
The auto-market growth was eventually going to slow. The automakers are already on board with factory-installed receivers, though there's still a healthy slice of that market left to reach. However, we're also now heading into the upgrade cycle, where the earliest satellite radio fans are simply swapping old cars with Sirius or XM receivers for new ones. That won't translate into growth, unless Sirius XM can successfully persuade used-car buyers to reactivate dormant radios.
All of these factors find investors rallying around the iPhone and WiFi-enabled iPod touch as growth catalysts, though it remains to be seen how popular the application will ultimately be.
There are now tens of thousands of applications available through the App Store. Sirius XM has the marketing budget to stand out in a crowd, but will it be compelling enough to matter? Since March, existing subscribers are paying $2.95 a month for Web streaming. Those who don't have a satellite receiver -- the juiciest potential market here -- will have to pay a whopping $12.95 a month.
When you're a captive audience, $13 a month doesn't seem like a big deal. Satellite radio works well in a car, when the other factory-installed alternatives are terrestrial radio, CD players, or hard drives that require feeding. However, the App Store is already brimming with several free audio-streaming offerings, including Pandora Radio, imeem mobile, Yahoo!'s
Fans will argue that Sirius and XM have superior content than most -- if not all -- of the free alternatives. However, the quality gap isn't as wide as it is on the terrestrial radio dial.
Few (if any) existing App Store programs require monthly subscriptions. Some enterprise software solutions -- like salesforce.com
Sirius XM is hoping to change that mind-set. Is it worth the hassle? You bet. There is some serious upside if the app takes off. Down the line, there are also global implications of a distribution strategy not limited to the reach of North American satellites. However, investors need to be realistic. An iPhone app won't be a slam dunk for satellite radio. And if it doesn't stick right away, it won't be long before a "lite" ad-supported version arrives to better compete with established free rivals.
Welcome to Apple's world, Sirius XM. Don't blow it.
Other ways to slice and dice satellite-radio fandom: