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.
Well, if you say it is true.. Then it must be!!! LOL!!
The truth is the truth. Because David Ray says it is.
Let's do a check back... Oh!! Let's say 3 years ago to see what David had to tell us all back then...
To: pcstel who wrote (497) 3/27/2003 10:06:47 PM
From: AliasNotAvailable Read Replies (1) of 2730
Not when your revenue growth which is limited by the subscription price is offset by CPGA costs that require 4 years of ARPU to recapture you subsidy plus interest.
This is nonsense. While today, it is a fact, that SAC amounts to about 100% of the first years' subscription revenue, given the low churn rates it isn't an issue. Over the last two quarters unit SACs have dropped, and obviously will continue to do so. From a cash flow perspective, what is important is that SAC level off at some reasonable level prior to the time the satellites have to be replaced (which will require additional cash flow). TODAY, the subs from 1 year ago are paid for. So, your argument that SAC effectively prevents profitability is without reason.
And losses continue to increase at a rate that far exceeds revenues.
This statement is utter nonsense. The company will obviously break even (for cash flow purposes) in '04 provided sub targets are met. THAT is what is significant. From that point forward, this company generates cash at an impressive rate. With 10M subs, well within reach over the coming several years, you're looking at a billion and a half a year (including ad revenue). Now, if it costs a billion to get those subs in hand, who cares? When you've sold 10M radios, the cost of adding a sub will be measured in dollars and cents, not tens of dollars. (It's called Economies of Scale, you may have heard of it).
OK! If you say so!
I do.
Message 18764429
Can anyone correctly count HOW MANY TIMES David Ray was 100% WRONG in this post??
But, just like with your typical "popsicle stand".. You just back up 20 yards, draw a fresh line in the sand, and attempt to act like all of your "previous 100% Wrong predictions that were presented as 100% FACT", never existed. And then start your "wishful thinking" again.. And let me tell you.. Excuses.. That's one thing "popsicle stands" have plenty of. It goes like this. Well, no one saw this one coming, or that one coming, and no one could have predicted this or that would happen. Yet, these little items are all to familiar with those the have studied the habits of "popsicle stands". Hey.. Everything is going according to plan... LOL!
And so it goes,
PCSTEL |
