True to its name, it's taken a while for the Slacker to hit the market.

The potentially industry-altering portable music device was originally set to hit the market six months ago. Delays have bumped its release to next month, and it's quite possible that the digital cheese will be moved again before we get there.

The only thing we know for sure is that it's not vaporware. The Walter Mossberg column in this morning's Wall Street Journal features a review of the portable player. It's got a few bugs, but the same disruptive elements I wrote about back in April are still richly in play.

The Slacker is the handiwork of the folks behind music discovery site Similar to online destinations like Pandora and iLike, music discovery websites offer free music streaming based on listener input. On Slacker, for instance, you can pick a certain artist and have the site automatically create a station populated with songs by that artist (along with tracks by other bands that typically appeal to fans of that particular artist). Several genre stations are also available.

Slacker's player takes that functionality and makes it portable. Using wireless connectivity, the player refreshes with content when you're in range of a free WiFi hotspot. Programming is then stored in the player to stream away, even when you're far away from a broadband connection. Like all portable music players, you can also load your own music into the device if you prefer to know what's coming.

Everyone else should worry
Mossberg's critique is blunt. He calls it "chunky" while also picking on the low battery life between charges and a few operating glitches. These are the kind of knocks that leave me wondering if it will be bug-free for a national launch in a few weeks.

However, the fact that the two prototypes he tested ultimately provided the free music-streaming service, as promised, leaves little doubt that subscription-based providers like Napster (NASDAQ:NAPS) and RealNetworks' (NASDAQ:RNWK) Rhapsody need to worry, as well as satellite-radio stars XM (NASDAQ:XMSR) and Sirius (NASDAQ:SIRI). Even terrestrial radio now has another reason to begin feverishly chomping down on those fingernails.

Slacker's price of $200 to $300 isn't far removed from the retail prices of portable satellite-radio devices or high-end Apple (NASDAQ:AAPL) iPods. Now that more new-model cars are coming with iPod jacks as standard dashboard equipment, the Slacker makes sense as a penny-pinching replacement to players tethered to either monthly subscriptions or stiff a la carte track prices.

There's no free lunch. Slacker's 4-inch color screen is great for playing media and beaming album cover art, but it's also a sweet tool to serve up ads. Sponsored spots will help Slacker offset its costs. There are also the limitations of streamed radio. In the mold of terrestrial radio, one can't go back to hear a song again (from the streaming play list). While there are features to skip past dud tracks and single out favorites that will reappear more often, it's a hybrid offering that won't appeal to everyone. However, it introduces several new wrinkles to an industry that's begging for innovation.

A Slacker in every pot
If Slacker takes off, who has the most to lose? Offering significantly broader depth than conventional AM and FM radio, the learning curve and initial price tag are the biggest roadblocks to denting terrestrial radio's hood.

Portable media players also stand to suffer. This won't be an iPod killer, but more generic device makers such as SanDisk (NASDAQ:SNDK) will have a tough time competing against something that offers the same media storage functionality, along with the surprise bonus of fresh Internet radio programming.

The aural smorgasbord providers, such as Napster and Rhapsody, will also take a hit. Is paying $10-$15 a month worth the ability to cherry-pick streams within a deep library? It will for some, of course, although the portability of genre-specific music discovery is an awfully tempting substitute for skinflints.

So what about satellite radio? It's a mixed blessing. In the near term, it will be hard for regulators to block the pending merger between XM and Sirius as a monopoly when Slacker is in the marketplace. They all offer digital streaming of niche music stations. Sure, XM and Sirius offer up their tunes free of commercials. However, it's highly unlikely that advertising on the Slacker will ever be the vibe-killer that you find in terrestrial radio. Slacker offers even more flexibility than satellite radio, with the ability to zap out songs you don't like and single out the ones you want to hear more often.

Talk content is where XM and Sirius can stand out. There's no combination of newsy updates or podcasts that can compete, although that pits XM and Sirius against the strong suit of terrestrial radio, and both satellite radio and conventional radio lean on advertising in that area.

In other words, Slacker offers more challenges than opportunities to the existing marketplace. It won't be a disruptive force overnight, but one can easily see it as a gradual market-share nibbler. There's even a chance that the mighty iPod will be vulnerable, although that appears unlikely unless Slacker truly takes the country by storm.

Either way, every established player in this industry needs to be ready for what lies ahead. It may not seem all that funny to say that a Slacker changed the world.  

For the musical Fools:

Longtime Fool contributor Rick Munarriz subscribes to both XM and Sirius. He does not own shares in any of the companies in this story. He's also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.