Sirius XM Radio (Nasdaq: SIRI) knows that the dashboard is getting competitive. It's no longer about overcoming the threat of commercial-saddled terrestrial radio or the limitations of what's in a driver's portable media player or CD case.
If there's one theme that became apparent during both the CES and North American International Auto Show events it's that consumers want to use their smartphones to milk more out of the driving experience.
Wall Street Journal's Eyes on the Road column yesterday detailed some of the latest improvements in auto infotainment.
Fueled by a recent Deloitte survey that revealed a whopping 59% of car buyers between the ages of 19 and 31 view in-car connectivity as a car interior's most important feature, automakers and app developers are up to the following these days:
- Pandora (NYSE: P) now has deals with 23 automakers to make it easier for smartphone owners to seamlessly stream custom-tailored music playlists through car speakers.
- Ford's (NYSE: F) AppLink is now available in 4 million cars with SYNC, allowing deeper integration for accessing content. A free NPR streaming app will be available next month. Ford expects 9 million cars equipped with SYNC by 2015.
- Audi Connect is a $25-a-month truly mobile Wi-Fi hot spot. The service serves up Google Maps navigation, weather, and gas prices. As a hot spot, it also allows anyone in the car to surf the Web. Your Pandora stream or mine?
Pandora's growth, in and of itself, isn't a problem. Both Sirius XM and Pandora have grown in the presence of one another, though Pandora is naturally growing a lot faster. The same can also be said about each and every single dashboard-tickling device that has hit the market. Sirius XM managed to wrap up 2011 with 1.7 million more subscribers.
The one thing that investors need to remember is that there's a financial incentive shelled out to auto showrooms when drivers become paying satellite radio subscribers. Most of the other initiatives being rolled out -- save for the Wi-Fi hot spots -- are simply one-off feats to set one carmaker's automobile off from the rest.
Audi Connect will still bear watching. If someone is already paying $25 a month for unlimited data, paying an extra $15 a month for satellite radio on top of that may be a harder sell when connectivity opens up a plethora of music and live streamed content.
Mobile hot spots haven't really gone mainstream yet. Chrysler was all over this as far back as 2008. However, the desire for in-car connectivity has changed over the years.
There is room for all of the key players to grow for now, but sooner or later there's going to be a shakeout.
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