Will Apple's iPhone Save Sirius XM? No. (AAPL, SIRI)

Dan Frommer | August 14, 2008 12:47 PM

iphone-jack-johnson.jpgWill hopping on Apple's (AAPL) iPhone help Sirius XM (SIRI) deal with slowing growth and competition from other digital music devices? No.

In a note today, Citigroup analyst Tony Wible notes that an app could be on the way that brings Sirius content to Apple's iPhone.

Wible is excited about the idea. "While Apple is generally perceived as a competitor to satellite radio, the streaming application underscores that it may complement and help satellite radio," Wible says. He notes that the new application would:

  • Eliminate Sirius's costs of physical radios.
  • Help attract new subscribers at a lower cost (though with a higher royalty rate for Internet streaming vs. satellite streaming).
  • Likely improve the ability for Sirius subscribers to purchase tracks from Apple's iTunes store.

Sounds nice, but we don't think it's a big deal. Why not?

  • The iPhone -- and any cellphone -- is hardly an ideal device for listening to the radio in your car, where Sirius shines. After you figure out how to hook it up to your car stereo system, relying on AT&T's cellphone network signal to reliably deliver an uninterrupted audio stream could be a losing proposition.
  • Besides Howard Stern, there's not much unique Sirius content worth paying for to listen to on your iPhone that you can't get from other radio sources. An 80s station is an 80s station, no matter the source.
  • There's plenty of other ways to listen to music on the iPhone that don't require a subscription fee, including its built-in library, and free apps from Pandora, Last.fm, AOL/CBS radio, etc.
  • Cellphone owners have been able to stream satellite radio content for years, and that hasn't done much for Sirius or its former rival XM.

Would an iPhone app get Sirius subscribers to use the service more? Perhaps. Is it going to convince more people to sign up for the service itself? We don't see how.

See Also:
Your iTunes Library Anywhere? An iPhone No-Brainer For Apple
The iPhone's AOL Radio: Bad News For Sirius-XM, Good News For The Music Biz
The Sirius-XM Hangover: Endless, Growing Competition
What Happens To XM And Sirius After A Merger? Not Much, And That's A Problem

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20 Comments

Henry Sohn said:
Uh, have you ever used XM or Sirius? It's not just the music. It's the fact that I can listen to CNBC or CNN/Fox or other major cable networks while I'm in the car that is a huge boon. You can't get that anywhere else, and no, it doesn't really matter that you can't see anything. Audio is fine.
Ray Jones said:
You seem to be very negative on Sat radio. I assume you don't have the product. Take my word for it...you will NEVER go back to free radio. Its a great product. No one likes the stock right now which is ok with me. It's a show me stock now and the market is pricing it accordingly. The question is what will it be 1-2 or 3 years from today. I think they will do very well. ( you might get it if you were a sports fan...but I doubt it)
Bob said:
Dan, you're an idiot!
LOL
Josh E said:
Dan, nice article.

Ray, Henry I think what you are missing is that at the moment you may not be able to get CNBC/Fox etc in your car but as mobile internet access increases you will. Sirius was ten years too late.

Satellite deliver is too costly compared to cellular/Wifi. Its very good for boating or if you live in Alaska but those markets aren't big enough to support $500m content contracts.

Sirius should consider acquiring Napster and then figure out a way to get playsource to work on an Ipod. Hording MP3s is not the same thing as holding on to vinyls and I think the market will eventually realize that. Every person I know that has tried an unlimited music service has never switched back.

I use Napster but also use Pandora (sometimes I prefer not to choose which music I am listening to).

Thoughts?
Josh, no need for sirius to acquire Napster - they can set up their own online store/or subscription service quite easily. The question is: Subscriptions services haven't really caught on here, even though plenty of folks have been trying. So why would Sirius succeed?
hehateme said:
pay radio is dead. if you have a iphone can"t you use LAST.FM?
Ramzi said:
Internet Radio and Sirius are not the same... trust me, I listen to all.. Pandora, AOL Radio, Sirius and XM...

The 80's station on Sirius has personalties.. chat.. etc.. it is actually fun and engaging..something that Pandora and the likes simply lack..

Sirius has BBC, Radio One, three NPR stations, Howard, Martha, etc.. etc.. it's all about content, content and personalities... getting it all on an iPhone would be sweet. And yes, I realize that I can get a lot of that stuff for free from questionable third party sources, but Sirius makes it easy, with a good quality, and engaging.

I like Pandora when I'm exploring new artists, but when it comes to radio, can't beat Sirius.
benny blanco (URL) said:
I'd certainly been looking and waiting for the Sirius player to come out. I dropped by Hardware Account at the beginning of the year for an Internet only access. This would be awesome.

I wouldn't necessarily agree that ALL 80's stations are the same, but now that the aol player can access KROQ2 it, will certainly mirror more closely the paid version of Sirius' First Wave channel.

ray jones said:
josh if you were correct ESPN would have died years ago. Who needs ESPN....MLB...NFL...NBA...should have there own channels. Distribution won out...lets see if you have 30-40 million subs you can pay the leagues for EXCLUSIVE content. Don't think distribution is important? ESPN will announce shortly that the NFL channel games are moving to ESPN classic. Think Stern...Oprah....Nascar...and music in one spot..revenue sources other than subs. Its the exclusive content....that wins...and Sat radio is positioned to pay the most...sound like ESPN to me...
duedilly said:
frommer you lazy slouch, you continue to piggyback on savitz' posts without attribution:

http://blogs.barrons.com/techtraderdaily/2008/08/14/heres-an-idea-stream-sirius-radio-on-your-iphone/
happy said:
So let me understand that straight... In this article you are saying that it is very unpractical to have music played over your iphone. And in the previous article you were having orgasms over the fact that Apple is working on being able to access the iTunes library on iPhone, So which one is it? Or are you just picking on Sirius like all the rest of the naysayers...

Of course anyone with half a brain knows that the value of Sirius on mobile devices IS NOT for the music - but it is for the live news, analysis, informational programs that are of no value when you get them a day later on a podcast. In addition you are basing your analysis on the existing channels - but how do you know what the lineup will be in a month? you don't of course.

Life is not all music.
jo said:
one word.



HOWARD

Rick said:
How incredibly short sighted are you? The iphone is not the intended to be listened to in the car. How about the millions of people who take mass transit to work? As for other than Howard, how about Opie and Anthony and all the sports channels? Mobile satellite radio that is not in your car, listen as you go. You are either shorting the stock or totally incompetent. No matter how you look at it, this article is a total sham!
leo d. said:
dan,

trust me... as a gear head and trying to be part of the bleeding edge, and as both a subsriber to xm and sirius, i waited for the iphone to get a faster cell speed.

then came 3G.

and this will be the killer app for me on the iphone.
brad said:
Just paid for 3 more years with Sirius. Wish I had it in all of my cars. And to add it to IPOD would not only benefit Sirius XM but also APPLE in the sense that APPLE would draw commission/royalties and would allow for its customers to hear music they will in all likelihood later purchase. For Sirius, it would mark another avenue for it to sell its product, which is terrific.
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