Despite Uncertainties, Satellite Radio Sales Ramp Up

Last month satellite radio took a giant leap forward as XM Radio launched its service nationwide and Sirius promised to join suit, after several delays, with a launch in three markets in February.

As XM pushed into the North, completing its nationwide delivery, Sirius told analysts that it would begin selling its service in Houston, Denver and Phoenix on Feb. 14 followed by a national launch in the summer of 2002. (See story p. 10.) Marking a total delay of about a year since Sirius' original spring 2001 launch plan, the announcement still received a favorable response from industry members.

"Obviously the sooner it's launched, the better," Jensen senior program manager Dale DiBernardo said, "but in light of Sirius' chipset issues and infrastructure issues, coupled with the CEO stepping down, this is a good middle-of-the-road date. This way they'll have a big showing at CES along with XM, so this is good."

Bob Law, Kenwood VP sales and marketing said, "The impact on us, based on our original production schedule is really negligible. We weren't planning shipment on our products until February or March."

Jensen is also adhering to its original product plans and in February will ship its SSR 2000 universal FM modulated tuner module, which also has an auxiliary input, and was shown at CES 2001.

Panasonic, however, said the Sirius delay is causing the company to re-evaluate its launch plans. "We're not certain, at this time, if we will go with one Sirius unit or a full line," national marketing manager Rob Lopez said. When asked about the idea of a limited preliminary launch, Lopez added, "Ideally we all would love to see a national rollout, however the concept of launching by territory is an opportunity for the manufacturers and retailers to adjust to this new category."

Clarion manager of technical marketing Jeff Abrahms said that at CES the company will launch a line of four Sirius-ready head units and a multimedia piece that will work with a Clarion Sirius receiver. An add-on outboard control panel will also be available, which can be used with Clarion products from last year. It will also have an FM modulator to work with any brand of product, Abrahms said.

For its part, XM's biggest headache appears to be a shortage in receivers, tuners and antennas from several aftermarket suppliers.

Dealers said sales of XM were fairly good with some claiming per-store sales at 3 to 6 units per month. Considering the national mood, and the spot product shortages, retailers said the performance was reasonable. Many said they are encouraged by the broad demographic the service is attracting — from teens to adults 50 and up — and are giving the service high marks in performance. Several, however, claim the shortages are hampering sales.

"It's not on fire, but its good," said Paul Gosswiller, merchandise manager at Audio Express, a 35-store chain based in Phoenix. "XM sales are good. I'm selling to reasonable expectations, about a half dozen per month per store," he said, noting the chain is still short on XM antennas.

Custom Cellular & Stereo, a seven-store chain based in Carrollton, Texas, reported selling close to 30 units in October, while Dan Jeancola, mobile electronics buyer at Sound Advice, Dania, Fla., said, "XM is selling better than we anticipated to a surprisingly wide range of ages. This is the most exciting thing we've put up since DSS."

Retailers say Pioneer XM tuners are in better supply than Alpine and Sony, leading some Alpine dealers to pick up Pioneer. "Sales are good, but there is a national back-ordered situation where antennas are continually out of supply," said David Stein, president of Earmark Car Audio, Dallas. "We are also tired of losing sales because of back-order on Alpine receivers, so even though we have not carried Pioneer in the past, we will carry a Pioneer CD receiver. We made this adjustment as of nine this morning."

Alpine said spot shortages were caused in part because XM pushed up its schedule. "With XM advancing their timing somewhat in the Southeast and putting pressure on manufacturers to try to push up our schedules, its been a little difficult to supply the country. But we're in a caught-up position as of [mid-November] and should have adequate supply by the end of [November]."

Progressive Mobile Electronics in San Diego, a retailer involved in the initial launch, reported having sold 15 to 20 units since the launch and is still facing back-order on Alpine units and Terk antennas. Crutchfield, which announced it received 500 orders for XM radio, said sales are "favorable" and that it still faces availability issues, according to a spokesman.