Sirius XM Radio
BusinessWeek is shining kindly on the satellite-radio operator and other in-car gadgetry makers, including GPS giant Garmin
Between details of the "Cash for Clunkers" program that will be revealed next week, and last week's successful bankruptcy exit by General Motors, consumers will be armed with the incentives and confidence to spring for a new set of wheels.
I admit, thought, that I don't see the argument for Garmin. Too many smartphones provide free rudimentary road-mapping, and that reality is only going to increase as network speeds improve. Not everyone has a smartphone, of course, but a good chunk of that market either will upgrade to a smartphone eventually or probably couldn't afford a Garmin or TomTom GPS system anyway.
The case for Sirius is slightly more compelling. If GM fans are inspired to upgrade to new GM cars -- or if the "Cash for Clunkers" program inspires owners of older gas guzzlers to trade in their rides for more fuel-efficient cars -- we're talking about a whole lot of new cars moving off the showroom floors, with factory-installed Sirius or XM receivers aboard.
This is good news, but it's not necessarily great news.
- Satellite radio has been around for years, so an ever-growing percentage of new-car buyers will simply be existing Sirius or XM subscribers.
- Cost-conscious swappers who will trade up to a gas-sipping car may not be the ideal audience for pitching new premium audio subscription services.
- Channel consolidation and select price increases have also turned off some potential buyers.
I still feel more confident about Sirius XM's long-term chances than I do about Garmin's, though. Yes, Garmin is the profitable one of the two. It also has a chunky dividend yield. Besides, smartphones will eat into Sirius XM's business, too, since media heavies CBS
However, Sirius XM's subscriber base should stabilize as the auto industry improves. Can anyone say the same for Garmin? That may be the key difference.
More news than static on Sirius XM: