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No. of Recommendations: 5
How can Sirius have better reception...no one has heard it yet. The reception issues are not a pertinent matter as both will transmit crystal clear sound. While XM's largest partner might be GM, they are also contracted with Honda, and Toyota will soon follow(GM and Toyota have a solid business relationship and brand a few of their models in Japan). Ford is currently cutting their workforce due to slowing sales. DaimlerChrysler is the only viable force at this point...eliminate the Jeep line and Diamler will again be one company. BMW does not even figure into the equation as they sell nowhere close to the amount of cars as the previous three mentioned. So where does this leave us?....50-60% of all the cars on the road will have XM service installed in it. The argument that only high priced car owners will have Satellite radio is a very shortsighted one. Just today on the XM conference call it was made clear that the chipsets that receive the signals is constantly being made smaller. This will significantly reduce costs and thus passed on to the consumer, where in time only the monthly fee will be all that is necessary. With this in mind XM has partnered with the correct brand names.

So let's forget all the carmakers for a while. The aftermarket radio business is huge. Once again XM has strategically paired up with the three largest names in car audio...Pioneer, Sony and Alpine. Sony is the only one that makes an XM unit for the home. While Sirius is mainly focusing on the auto market XM see that the service will go far beyond just cars. WIth so many channels of music to choose from, commercials are not really an important factor either. At 6 minutes for every hour, it is hardly noticeable..and this is not on every channel either. As a matter of fact Sirius is already offering discounts on their monthly membership if you sign up for a year. The ad revenue is a crucial one in the radio business and Satellite will be no different. Currently only XM sees the potential in addition to subscriber numbers...in their most recent quarter revenue was $520,000, of which $290,000 was ad revenue.

Lets assume the previously stated post was correct in his calculations, which would garner 1 million subscribers by 2005, and make XM a debt riddled company. XM has called for 350,000 subs by the end of this year. At this rate lets assume 5 million subs by 2005. Kind of throws everything out the window doesn't it? XM will remain of the two...shorting Sirius is the right long term call.
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