Sirius, Hot or Not?
Posted on March 19, 2009
Filed Under Uncategorized |
With the merger of XM and Sirius complete, this might as just be about satellite radio as opposed to simply a company.
It’s no secret that Sirius XM’s business has been hurting. Its recent brush with bankruptcy merely highlighted the huge obstacles the company faced from the beginning: massive capital outlay on satellite infrastructure, and huge spending to attract subscribers.
[From Sirius Founder Says The Company Is Screwed | Techdirt]
The technology industry is awash in roadkill who’s business depended on massive capital investment, significant customer adoption costs, and an entrenched legacy industry prone to technology disruption from unpredictable sources. Webvan, Amp’d Mobile, DeNovis, Kozmo.com, Pets.com, Procket, and Iridium are all examples of technology driven companies that required huge capital investments and blew up because customers were not there, the business model didn’t work, or some orthogonal technology development made them obsolete.
On that last point Iridium comes immediately to mind and in many ways is most like Sirius. Enormous capital investments to operate a service that has hard economics, a fickle marketplace, and ultimately undone by the march of cheap cellular technology which made them obsolete for the broader market before they could achieve critical mass.
Having said that, I don’t agree with Longino’s assessment that internet radio is knee capping Sirius; it is more accurate to explain their demise as a consequence of the global slowdown in new car sales, which is where their customers are coming from.
I have Sirius in 3 cars and XM in our home, satellite radio is fantastic and really eclipses anything Internet radio offers by a wide margin, both in the convenience and quality of service. I am constantly frustrated by Sirius’ approach to online streaming, which requires an additional $3 a month subscription on top of a rate plan that has jumped in price by a significant percentage, and most damning is that the online streaming channel lineup does not map completely to the satellite radio offerings. I can get CNN (channel 132) via Sirius online streaming but Fox News (channel 131) is not available online.
The mobile offerings have been pretty weak and the recently released iPhone software app is a step in the right direction but it relies on the streaming service, which means you have to sign up for the additional $3 a month and you won’t get all of the satellite channels on your iPhone.
What Sirius should do, IMO, is offer an all you can eat pricing plan that covers satellite and online streaming, close the gap on the channel lineup (which no doubt is driven more by the content owners than Sirius), and lastly, invest heavily in the non-satellite business with better mobile devices and a full range of rich mobile applications that install on iPhone, Bold, Android, and Windows Mobile offerings. Customer don’t care that it’s satellite radio, what they are buying is always on high quality content that is available anywhere and Sirius should take the challenge to become an integral entertainment provider to their customers whether they are in their car, home, office, or just walking around town.
Just like I’m willing to pay for an iTunes download instead of searching for a free download, I am willing to pay for online streaming coupled with my existing satellite radio but it has to be convenient and full service rather than the piecemeal approach that they are taking now.
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About
My name is Jeff Nolan and I write Venture Chronicles. These are my thoughts on technology, innovation, management, public policy and pretty much anything else that I find interesting.
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