Well you were the one that claimed I didn't understand the power of the business model.. That I didn't comprehend how this model would SCALE. These were the same things you were saying several years ago.. But, not much has changed. First you complained that they didn't market the company enough. Now when you see the figures.. You think they are spending too much.
I do believe the model will scale. For example, up until now, both companies have had to subsidize the cost of receivers. But XM is transitioning away from that requirement, and someday, Sirius will, too.
While a great deal of money has had to be spent on educating the public as to what the product is, I don't believe that continues into perpetuity. Eventually, the public KNOWS what it is and simply buys it or doesn't. The subsidies to OEMs won't always be the huge cost they are today. There is plenty, even in the marketing area, that will scale.
I think it has been very convenient for you that XM increased its spending in Q4 in an effort to combat Stern's arrival. Had they not done so, much of your argument ("See what I told you? Costs aren't getting lower") would be neutered. So, we'll just have to wait and see what happens.
If it turns out that the growth doesn't continue, you will have been proven right -- the market wasn't there to support ARPU/CPGA/Churn. But if the customers continue to show up the model is going to prove out.
While you would like to be annointed as "correct" today, it is just to early to tell. I do think there is a chance that satellite radio will not be as big as I once thought; but it is difficult to tell whether it is just a result of XM doing a lousy job of marketing the product or whether the market simply doesn't exist.
So, when are you predicting the first bankruptcy, and how many subscribers do you expect SDARS to have by 2012? |
