Thursday, November 30, 2006

Digital Fusion – All in ones reign supreme.

If you try and think of all the services offered today via satellite, you probably can’t count them on one hand. Cell phones, GPS, Satellite Radio, Television, Automobile tracking devices, Weather, even pictures of your house from space! The possibilities of integrating all these functions and services are now apparent, and becoming quite lucrative.

If there’s one thing that’s true today, computers perform a lot of functions that used to require massive amounts of bulky equipment to execute in the past. Thanks to digital, many electronics now multitask and complete functions virtually, allowing for comprehensive integration. Two new satellite products have just been introduced the market that promise to integrate digital satellite services in a truly unique and marketable way. The Raymarine SR100 Sirius Satellite weather receiver and the Bushnell ONIX400CR GPS/XM handheld are the latest innovations combining multiple digital powers into one convenient package.

GPS has been the easiest convenience to integrate with electronics, because it can be manipulated in so many useful ways. It’s installed into nearly all new cell phones as part of a 911 locating system, and can be found in most new automobiles and satellite radio receivers. Bushnell, a GPS device manufacturer realized this opportunity and decided to include an XM receiver chip in its newest device. What makes Bushnell’s product so cool is that it’s capable of synchronizing GPS capability with XMTraffic and XMWeather. This means that if you’re jamming to XM on the way to work in the morning, your radio will alert you of any delays, accidents, inclement weather or complications ahead, and suggest an alternate route for you to take based on your current position. Raymarine's E-Series Navigation Displays is the first to integrate with SIRIUS Satellite Radio's Marine Weather Service to show advanced, animated weather forecasts for boaters.

The concept of the digital revolution feeding off of itself is creating major possibilities for today and the future. It will be tricky trying to embrace this rapidly growing industry, and even a little bit scary. However, at least the kinds of services these toys now offer somewhat justify their outrageous price tags.

Saturday, November 18, 2006

Your complimentary in flight magazine and satellite radio.

In a bold, yet unprecedented move, AirTran Airways recently announced it will be giving every single one of its passengers a voucher for a free Roady 2 XM satellite radio receiver. That’s right; every single passenger gets one just for flying. According to Orbitcast, the vouchers for the free RoadyXT radios will begin on flights starting today, and continue throughout the holiday season or until flight attendants have given them all away.

In a stunt that mimics Oprah’s car giveaway some years ago, XM and AirTran have teamed up to execute quite possibly the greatest hardware promotion yet. Now, of course the radio is free, but the subscription service isn’t. This is a strategy that Gillette figured out a long time ago with its “free razor on your 18th birthday” promotion idea. Gillette incurs the minuscule cost of giving you a free razor, and expects in return to make hundreds off your purchase of replacement blades. Similarly, XM is incurring the minimal cost of giving away a receiver, in hopes that it’ll reap unbelievable profits from new subscribers.

Interestingly enough, AirTran already offers complimentary in-flight XM Satellitite radio service at every seat on their airplanes. With a regular set of headphones, passengers can enjoy the blissful, commercial-free satellite radio experience that so many have come to love. Not only does this provide a 170+ channel alternative to the traditional 7 channel in-flight radio, it is a major promotional tool for XM. All passengers receive a free XM radio trial that lasts the entire length of the flight, and it is as simple as plugging in your headphones.

It’s becoming apparent that satellite radio is being forced to become more and more creative with its solicitations lately. As the audio market becomes more saturated every day with mp3 players, new satellite providers and HD radio, the competition is becoming fierce. Not to mention, XM and Sirius’ main efforts now are to attract the very niche, yet populous crowd of people who don’t have much interest in satellite or personal audio in general. As the holidays approach, there will be a major opportunity to increase subscriptions for satellite, and judging by this promotional event it looks like XM is thoroughly prepared.

Thursday, November 16, 2006

New Players in Satellite Radio

Satellite beware! There’s a new satellite radio startup company sneaking up on the industry from behind lately, called Canada Satellite Radio (CSR). CSR is one of two satellite radio providers in Canada that started service over a year ago. CSR is the provider of XM Canada, and the other Canadian provider is Sirius Canada, the direct competitor of XM. CSR’s mission statement is that it is “seeking to become the market leader in providing subscription-based satellite radio entertainment to the Canadian market.” Though it is still too early to tell, this mission could become somewhat of a losing battle real fast. CSR recently reported that it lost $102.7-million in its first fiscal year. Executives at Canada Satellite Radio attribute the $100 million loss to massive startup costs including the launch of a satellite, marketing costs and satellite receiver sales promotions.

What’s notable is that if CSR does eventually gain it’s footing, it could potentially become the third leading satellite provider in the world. Considering XM Canada is provided in partnership through CSR, the Canadian company at least has some solid training wheels to help get it going. Comparatively, XM reported 76,242 total subscribers after its first fiscal quarter in business. CSR has recently reported gaining over 120,000 subscribers within its first year. Considering the satellite radio market is slowing down, as providers try to scrape up every last subscriber they can, CSR isn’t really doing that poor of a job (subscription wise).

I would just like to point out that, regardless of the financials it’s nice to start seeing some diversity within the satellite world. Granted, there are extreme startup costs, as CSR has shown, only two companies (XM and Sirius) orchestrate the satellite radio world right now. Increased competition in general, will mean slower-rising prices, and better quality service. It feels as if currently, the world is being taken advantage of by only having two major satellite radio companies. WorldSpace, a startup “international” satellite radio company in the eastern part of the world has also entered the industry, but shows little promise as it continues to lose around $30 million each quarter.

Most businesses aren’t as risky as satellite radio. For instance, typical businesses aren’t required to launch multi-million dollar satellites into orbit just to get started. However, money is made where the risk is high, which makes the entire satellite radio concept such a big gamble. In fact, so far neither XM nor Sirius has broken even after being in operation for about five years now. This only shows what’s in store for CSR down the road, so I hope they’re prepared.

As for me, I think I’ll stick to opening up a small pizza shop.

Friday, November 10, 2006

Can Satellite Say "Jackpot?"

A recent report by Bridge Ratings, extensively outlined the purchase rates and demand of satellite radio. Among other things, it numerically showed who the most promising consumer is in satellite’s future. So who is it?…drum roll please….College Students! That’s right, us college students are crazy about satellite and are proving it with our wallets (and our parents wallets) as the holiday season approaches.

If we can learn anything from generation Y, it’s that we hate commercials and want them to suffer a slow, miserable extinction. One way of doing that is by turning off terrestrial radio and blowing $400 on an iPod. The second way to avoid advertisements in our (music) life, now more apparent than before, is by purchasing a satellite radio receiver. It’s not certain whether Sirius and XM include the college-aged demographic as a “heavy user” when marketing, but they better start focusing more resources on them. The numbers have spoken, and they are telling the satellite industry there is a huge, untapped pool of potential subscribers among America’s higher-ed institutions.

Looking for alternatives, or even complements to the portable mp3 player, it is not surprising that the majority of satellite-curious college students are looking to buy portable receivers (57%), with Sirius subscriptions (60%). Sirius, being the preferred service provider is somewhat surprising, considering XM has more actual subscribers. However, this is congruent with Sirius’ latest pushes to increase sales. Sirius has been advertising like crazy on college football, and college watched sports. It includes certain college-aged programming like Howard Stern, and generally appeals to the college demographic by providing tons of commercial free music. As Orbitcast points out, Sirius has an advantage in awareness for college kids, mainly led by Stern.

Who knows how many college-aged generation Yers there are? And many of them have lots of mommy and daddy’s money to spend on luxury gifts like portable satellite radio receivers. Even if their parents aren’t loaded, the holidays are a comin’ and satellite radio is on a lot of gift lists. Bridge reports that “Follow-up interviews with this demographic show that the lure of the forthcoming holiday season has instigated new interest as the possibility of receiving satellite radio systems - especially portable ones - as gifts this year is a reality.” Well satellite, all I have to say is, DON’T SCREW THIS ONE UP.

Wednesday, November 08, 2006

Dead Air

So, it’s been two weeks since I emailed both Sirius and XM satellite radio about certain concerns I had with their service, specifically their websites. I was concerned that neither XM nor Sirius really strived to connect with their customers on an intimate level. I was right, and now I have proof that both companies could cares less. So, I figured I would let the two in on a little secret: In the world of relationship marketing, it would be most beneficial for companies to rise above the standard, typical, boring e-newsletter and start to really show concern for their hard-paying customers. Technology has evolved from the days of automated emails and websites with cool colors and no features. So why do multi-million dollar companies insist on lethargically sticking to primitive media. Both XM and Sirius act like the e-newsletter is this revolutionary solution to customer satisfaction, when in reality…it’s pretty lame. Not to mention, there’s no “what’s new” feature on either website…so I never know.

How do XM and Sirius choose to keep me informed with new innovations and products? The e-newsletter, wow good job guys. How does XM respond to my comments about their communications being just as good as dead air? They respond with even more dead air and don’t even email me back. How does Sirus respond to my comments? They send me the exact email I scrutinized them for in my previous post; three lines of superficial concern and then three pages worth of promotions and ads. Same old, same old, guys. Your satellite technology seems to be in touch with the 21st century, when can I expect your PR department to join?

Let me put it this way. Each day I wake up and am bombarded by flashy corporations trying to get my attention. In fact, one of those corporations is Apple, a direct competitor of satellite radio. Consumers’ attention these days is worth gold, and lots of it. That’s why when companies finally do succeed in getting a consumer’s attention, they usually treat it with the utmost care in order to encourage repeat business. In reality, XM and Sirius’ care for, and response to the customer is just as robotic as its digital broadcasts.

Thursday, November 02, 2006

Satellite synergy….it’s only the beginning.

For those of you who thought you’d never see the day…it’s finally here. If you are amazed at how a personal computer can fit into a shirt pocket, or a camera can be shoved inside a cell phone, then this will also boggle your mind. As if cell phones didn’t serve enough functions already, now they serve one more…a satellite radio receiver. I guess it was only a matter of time with this one though. I mean, we have two, portable satellite based technologies that serve the same functions – to receive audio/radio frequencies. Why have two separate components, when we can have one, compact unit? Well, it didn’t take XM and Cingular long to figure that one out.

Yesterday, XM broke news to its customers, newsletter subscribers and the world that it would be entering an exclusive partnership with Cingular wireless to offer customers the option of streaming satellite programming on their cell phones. In a press release sent via email to subscribers and newsletter recipients, XM stated that the new agreement provides Cingular customers with the option of receiving 25 XM channels on their cell phone for only $8.99/month. That’s right; you can eliminate the need for XM hardware and listen for $4 less than the full subscription rate. However, don’t be fooled by fancy-pants Mr. Marketing.

As it stands, this offer is a complete rip-off. Customers only get 25 channels for ¾ of the full subscription cost. That’s approximately 1/8 of the available XM channels for what should cost 1/8 of the full subscription cost ($12.95). By my calculations, this service should cost $2, not $9. Not to mention, XM will be selecting which channels you get to hear and don’t get to hear (something they scam people with through their online service too), and the sound quality will probably be less than optimal on a cell phone. XM should make it part of the deal that it can use Cingular’s transmitters, satellites and relay towers to increase XM reception and coverage, considering Cingular has “the fewest dropped calls.” Otherwise, I don’t think XM will really gain anything from this partnership.

I realize it’s still in the introductory stage, but this idea needs to be refined just a tad before going full steam. For now, the XM/Cingular package is just a load of digital garbage.

-thanks to gizmodo for the image!

Wednesday, November 01, 2006

Satellite Now Standard

Recently, XM and Sirius have been seizing car manufacturers in their tire tracks to sign exclusive partnership contracts. Satellite radio providers have realized the massive potential in auto manufacturer partnerships, and are wedding themselves to as many as possible. The car is one of the most common, if not the most popular place for listening to the radio, and it presents major potential to any radio programmer. Since satellite radio has reached a plateau of subscriptions, it has become increasingly difficult for XM and Sirius to figure out how they can enlist more customers. Making satellite radio standard in vehicles is a start. Making satellite radio, a premium radio service, a standard in premium automobiles is pure genius.

Starting in 2007 is when you’re really going to see the change. Most agreements are for luxury cars to be introduced this year. The combination of satellite radio and high-end cars creates a harmonious synergy that screams high-class, and reeks of profits. It seems as if they were destined to be together. The idea stems from the same psychological influence on people that makes consumers pay $40 for ripped jeans. The mentality of, “Regular radio is for the average Joe and his average car. I am not the average Joe and my car isn’t average either. Therefore, I demand premium radio.” There’s also a bit of practicality to it, in that more financially secure people do not need commercials, they can afford to pay for radio that cuts ads, and they like playing with expensive toys like Porches and satellite radio. It’s really a perfect match.

XM started its search for auto partnerships with Acura. The car company announced it’s collaboration with XM in early September. Now XM has signed an exclusive contract with Porsche, stating XM is the sole provider of satellite radio for Porshce for the “long-term.” Closely following right behind was Sirius’ announcement of its own automotive partnership. However, Sirius kind of outdid XM on this one. Sirius, starting in 2007 will be the exclusive provider of satellite radio to BENTLEY!!! Though, I don’t know how successful satellite is with Bentley owners, they seem a little too upscale, even for satellite’s taste. Just in case, Sirius is also signed up with Volkswagon and Audi. Nonetheless, I’m starting to really see some innovative and creative business sense emerge from satellite.