Sirius Expects Smooth Launch With Hardware Aplenty

NEW YORK— Sirius Satellite Radio said it expects to have full quantities of tuners and antennas for retailers when it launches next week nationwide, completing the rollout it began in February, almost a year behind competitor XM Satellite Radio.

Sirius service and hardware will be available at more than 3,500 storefronts as of July 1, including 350 Best Buy locations where interactive kiosks have been installed. In addition, Best Buy said it plans to add kiosks to another 150 stores starting in July.

Sirius service will be offered initially in a promotional package where consumers get three months free when they purchase a year's service. After experimenting with various promotions, Sirius said this was one of the more popular, according to Stan Kozlowski, Sirius senior VP of retail distribution.

The company expects adequate supplies of antennas and tuners to be available at launch, avoiding the shortages that hampered the early days of XM. "That may be one of the benefits of being second. Hopefully that is one of the lessons learned through XM, so the antenna suppliers are better prepared," Kozlowski said.

Kenwood began shipping tuners to dealers on June 13, according to sales and marketing VP Bob Law. "We've shipped everything on order. We've filled all outstanding orders for immediate shipment for this month. There's plenty of product out there and we have plenty of supply on antennas as well. Terk is the main antenna supplier, and my understanding is there's plenty of supply in the market."

Antenna Specialists said they had adequate quantities to provide antennas to retailers for Sirius demos. "By July 1, every store that Sirius wants to have an antenna will have an antenna for their roof," said Michael Uxa, Terk's national sales manager.

To kick off the national launch, Sirius sponsored a NASCAR Winston Cup race called the Sirius Satellite Radio 400 on June 16 in Brooklyn, Mich. The race aired on national TV, reaching more than 100,000 viewers. At the event, attendees were able to buy and receive installation on Sirius radios at on-site locations sponsored by Circuit City.

Sirius is also sponsoring Pole Day at the Sonoma 350, at Sonoma Raceway in California, where it is partnering with The Good Guys to sell and install radios on site. Other retailers are expected to partner with the company in a similar arrangement.

"We're not doing this exclusively with one or two retailers. We have a three-year contract with NASCAR and over the period of that contract, we expect to partner with dozens, if not hundreds, of retailers around the country in order to heighten the exposure of satellite radio," Kozlowski said. "There are a variety of ways we can develop this with local retailers. We're just scratching the surface."

Retailers said they are expecting a fairly smooth launch. Some, such as Audio Express in Phoenix, a 39-store chain, said sales for the category in general were increasing in markets where Sirius had already launched.

"All my markets don't launch until the 16th but I've got it in about half my markets right now," said Paul Gosswiller, merchandise manager. "[With two satellite companies] it's easier to talk about. Now, for any brand they want, there's a satellite radio that can go with it without RF modulation. With XM, we're at about 6 per store and with Sirius, about 4 per store."

Best Buy said satellite radio in general is growing from week to week with 50 percent increases from April to May and from early May to early June.

Several retailers contacted on the West Coast three weeks before launch said they were receiving, or were about to receive sales training for Sirius. Noted Tom Sweere, general manager for Beach Auto Sound, Huntington Beach, Calif., "Sirius seems to be doing things correctly. With XM, Terk was out of antennas and no one had any product for the first month, that was a bummer. People would come in and we didn't have product. I don't think we'll go through that with Sirius, but we'll see."

He also raised the issue of XM's first-to-market advantage. "I don't see nearly as many people walking in the store and asking to see what Sirius does. They may have lost the early adopters," he said.

Sirius also announced recently that it will begin using a new advanced audio broadcaster technology in time for its launch July 1. The company will be employing a new version of the PAC v4 Audio codec, developed by iBiquity Digital. IBiquity claims this new version of PAC is the most advanced audio compression software on the market.

XM Satellite Radio uses a coding technology called CT-aacPlus, which is a combination of Advance Audio Coding (AAC) and Coding Technologies' Spectral Band Replication technology.

For its part, XM, which announced it had won 76,000 subscriptions as of its second quarter, said it is on plan to achieve a third quarter goal of 130,000 subscriptions.

"We've met our objectives for the past two quarters and we're confident we'll do the same this quarter," said Dan Murphy, VP marketing and retail distribution. In regard to Sirius' launch, Murphy added, "We're hoping if Sirius does execute their national ad campaign as promised, they should increase the interest in satellite radio and it will float both boats."

XM said it is beginning to broaden its focus into the home audio market. Murphy said that retailers are starting to merchandise XM in the home hi-fi sections now that Sony is offering sufficient quantities of its plug-and-play home kit. "You'll see us continue to expand our presence in the home market," said Murphy, although he did not offer further details.