When a quarterly loss exceeds that quarter's revenues, it usually isn't dubbed a success. Given that, the praise is relative when it comes to XM Satellite Radio (NASDAQ:XMSR).

Yesterday, the company announced that its March-quarter revenues more than doubled to $102.6 million. The company posted a loss of $119.9 million -- or $0.58 a share -- but that was a marked improvement from the $170.1 million it bled through during last year's quarter. So, sure, it doesn't look pretty, but by losing $50 million less while making $60 million more on the top line, the satellite radio market leader is showing just how promising this scalable business can be.

XM is just getting started. It closed the month of March with 3.8 million subscribers and is still on track to finish the year with 5.5 million accounts. In a recent Motley Fool interview, CEO Hugh Panero projected that "XM could have well over 20 million subscribers by 2010."

For the quarter, XM's customer acquisition costs fell while its revenue per subscriber inched higher. April's 30% price hike to $12.95 a month assures that the current quarter will bring a more dramatic uptick in revenue per listener, even if existing users were able to lock in discounts under long-term renewal plans.

This is where things get interesting. While the satellite radio wars were originally waged at the automaker level, with XM commanding more than half of the country's new car buying market, 60% of the quarter's new XM customers were aftermarket subscribers. In other words, they went for portable models or third-party installations offered at consumer electronics chains like Best Buy (NYSE:BBY) or Circuit City (NYSE:CC).

Now that XM carries the same price tag as rival Sirius Satellite Radio (NASDAQ:SIRI), the battle will come down to programming. XM was a slow learner on that front -- Sirius snagged Howard Stern and the NFL and even wrestled away the NASCAR rights that XM had once acquired -- but XM has since been aggressive in its sports programming by hooking up with the PGA, IndyCar, and World Cup Soccer to go along with its flagship baseball contract.

I'm a Sirius subscriber (though I don't own shares in either company), but I have to admit that I admire some of the latest hardware coming out of the XM camp. I also like how XM has been able to strike content deals with the likes of Time Warner's (NYSE:TWX) AOL and airlines like JetBlue (NASDAQ:JBLU) and AirTran (NYSE:AAI). However, I think XM still needs further to go to match Sirius on the proprietary content front. I believe that pricing the service exactly at Sirius' $12.95 point was a mistake. A dollar less to play up the value of XM, or a dollar more accompanied by a more aggressive push on the programming front, would have been far better.

Still, this current quarter will be the most critical period in the company's history. How many new listeners will it be able to attract at the new price point? Baseball season will help, definitely, but will churn be kept in check, or will loyalty waver? Now that XM is no longer the cheapest option and most of its new users are aftermarket ones, this period will provide a good snapshot of what the future holds for XM in its battle not only against Sirius, but also against the rest of the audiophile world.

Yes, the June quarter really is that defining moment in the promising company's tenure.

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Longtime Fool contributor Rick Munarriz thinks it's cool that Sirius broadcasts The Motley Fool Radio Show four times over the weekend. He does not own shares in any of the companies mentioned in this story.The Fool has a disclosure policy. He is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.