XM Radio posted its financials yesterday and it looks like the
losses are increasing even as they add subscribers, mainly due to the cost of acquiring those customers. Much like with cell phone companies the idea is that once you have a subscriber you have a very dependable and consistent revenue stream.
Really though? It seems to me that by the time XM and Sirius have really built out their customer bases and are poised to become profitable... they are going to get hit with a nasty end around from the tech industry and telecom. Think about it, what are these satellite companies really offering? Greater choice.
But how can greater choice win against complete control? And that is what Apple and the rest are offering with mp3 players and mp3 enabled cell phones and now video iPods. Control over the media you consume.
Satellite radio's current competitive advantage is bandwidth and coverage. They have the ability to deliver a ton of content across a massive space. They are really in the business of delivering data. This is the same as moving a song, or any media, onto an iPod, nothing more than transferring data. Right now the bandwidth that moves that data onto an iPod or some other mobile device is tied to a physical broadband connection. But what happens when the cellular companies build out their networks to the point that everyone can get a broadband connection via their cellphone? Or a cell device built into a laptop? Or an iPod with cellular capability?
XM and Sirius will lose their competitive advantage, their ability to distribute content (data) in a way that others can't, and once that happens they will fade fast if they can't adapt. The companies that bring
control to the when, where, and how of your media consumption will rule the marketplace. XM and Sirius are selling choice, not control.