Satellite Radio Gets Ready for Prime Time
By Jessica Davis -- 11/17/2004
Electronic News
With Thanksgiving just a week away in the United States, shoppers are about ready to burst out of the starting gates in a mad dash to grab the bargains and the highly coveted items. And there are likely to be a good number of electronic devices on their lists.
From digital cameras to DVD-Rs to game machines to TiVos to MP3 players to giant flat-screen televisions, there's a lot to choose from in many price ranges. And it all translates to sales for semiconductor companies, which are getting more and more of their chips into consumer electronics devices.
Amid all the highly hyped items at the top of every list this year, one kind of device/service has been slowly building a following over the last several years and may be a sleeper of a success for this holiday season. I'm not basing this on any kind of number crunching or formula or even any special knowledge.
It's just that twice in the last week I was having lunch at two different popular restaurant chains, and each time, instead of the usual music feed they buy from some corporate provider, they were playing a station from satellite radio provider Sirius. And because I liked the music that was playing, and because my husband has been asking me what I want for Christmas, I started thinking, well maybe I want a satellite radio. And it made me wonder if other people have had the same experience.
Now, I am no fan of Howard Stern, but many, many people are, and the recent deal Sirius struck with the radio host is likely to push more people to buy into the concept of satellite radio. And, baseball fans from around the country who have moved away from their home teams will likely be very interested in the deal that XM Satellite Radio has struck with Major League Baseball to broadcast every game from every team and also broadcast some games in Spanish.
Now, many people have balked at the idea of satellite radio because users must pay a subscription fee for the service. But in return they get more than 100 channels of a variety of different styles of music, news and talk radio. And while there is some advertising on some of the channels, it is nowhere near the 20 or so minutes an hour that seems to be the norm on many broadcast radio stations today.
Sirius has said that it is on track to have one million subscribers by the end of the year, and XM has about 2.5 million subscribers. Many early subscribers had radios in their cars or devices that hooked up to home stereo systems. Now XM is marketing portable satellite radio device -- the size of a mobile phone -- a move that could attract more subscribers just in time for holiday shopping.
Chips to enable the services and the devices have come from STMicroelectronics and Agere, among others. Meanwhile, broadcast radio companies have been working to get digital terrestrial radio up and running. This upgrade to traditional broadcast stations would allow them to offer additional channels and some of the services that are now only available from satellite radio. Texas Instruments has contributed its technology to the digital terrestrial radio effort. But the slowness of this kind of radio to market has demonstrated how much easier it is to build from scratch -- i.e. satellite radio -- than it is to update a legacy system. Clear Channel announced this summer that it plans to upgrade 1,000 of its stations to digital terrestrial radio over the next three years. But satellite radio is available now.
One other interesting market entry in the radio area for this holiday is an Internet radio. Of course, this must be networked to your PC somehow, but this Internet radio lets you play any of the radio stations available over the Internet -- whether they are local stations for you, or stations from 3,000 miles away. It's an early entry, but this is an interesting offering, and it marks just the beginning of how advertising on radio will be disrupted in years to come.
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