Satellite Radio Gears Up For 4th Quarter

By Amy Gilroy On Oct 11 2004 - 6:00am

If all goes well, this Christmas may be the season satellite radio retailers have been waiting for, with high demand and plentiful product.

On the demand side, satellite radio tuners and accessories are the fastest growing products in car audio. Year-to-date sales to dealers through August were up 100.5 percent in units and 101.4 percent in dollars, according to CEA. Total unit sales exceeded 2.4 million and dollar volume exceeded $150 million on sales of tuners, integrated tuner/head units, accessories such as antennas and FM modulators, and a “handful” of home and portable units, according to a CEA spokesman.

XM announced new subscriber sales of 415,000 for the third quarter, for a total of over 2.5 million, with more than a half a million new subscribers expected in the fourth quarter. Sirius is also bullish on the fourth quarter due to new retailer alliances and placement wins at stores such as Wal-Mart and RadioShack. Both XM and Sirius are beefing up programming with a number of sports channels debuting this season, as well as original music and talk shows.

On the supply side, vendors are promising the widest array of plug-and-play and direct-connect tuners to date.

XM said XM Direct cables for Sony and Pioneer have just shipped, and cables for Kenwood and Alpine will ship this month. Terk, which distributes XM Direct, said that Kenwood cables have also just shipped but that Alpine cables may not be available until November.

Other XM products due this month are a new Dual head unit, the first to offer built-in smart cable technology for XM Direct tuners and the Delphi SkyFi2 with a 30-second memory buffer that allows users to rewind through the last 30 minutes of the music.

On the Sirius side, four plug-and-play tuners are expected to ship this month from Audiovox, JVC, Sanyo and Xact. Sirius released its plug-and-play Sportster last month. Sirius also said the first of its direct-connect universal Sirius Connect tuners will ship this month for Alpine head units.

One of the more dramatic trends beginning to emerge in satellite radio is the dual-compatible head unit that can work with both XM and Sirius, as seen in Alpine's 2004 model line. Even if suppliers themselves don't offer this capability, XM and Sirius, through third-party technology, will be able to supply tuners compatible with all the key brands, perhaps by next year, according to Sirius' senior retail VP Bob Law. “I think you'll probably see that capability exist for all the major brands next year. XM developed the Kenwood tuner on their own, so they might do the same for some of our other partners, and we might do the same for some of their partners,” Law said.

XM did not rule out the possibility of offering cables for additional brands in the future, but said it does not pre-announce products. The company noted, however, that it is possible that more brands may take the path of Dual and build smart-cable technology directly into their head units, to work with XM tuners. This allows users to save the $49 price of the smart cable and pay only $49 for the XM Direct tuner.

The first of these units, from Dual, is the XMR6910 CD/receiver. It requires only a passive cable that ships with the head unit for connection to the XM Direct tuner. It plays CD-R/CD-RW discs and has a power output of 52x4 watts. The XMR6910 is expected to ship in October at a suggested retail price of $179.

Jensen, owned by Audiovox, said it will follow suit with a similar unit in the fourth quarter. The company's new MP5720 will also have embedded smart-cable technology. The 5720 will offer MP3 compatibility and is expected to sell for under $200. This will also make Jensen one of the few brands to offer both XM and Sirius products. The company already markets the SPN PR1 Sirius plug-and-play receiver.

Audiovox is also planning separate XM and Sirius units. The company's first XM plug-and-play receiver, the XR9, is due to ship in November, and a Sirius SIR PnP3 plug-and-play receiver is slated for delivery this month.

Retailers say they welcome dual compatibility because it gives consumers a broader choice. Ultimate Electronics' merchandise manager Greg Thomas said, “We're excited about the Sirius tuner for Alpine and the new XM adapters for Kenwood. It makes it a lot easier to sell all the products — consumers aren't limited to one brand of satellite. They get to choose, which is the way it should be.”

Another key issue for XM has been the lack of direct tuners for key car audio brands Alpine and Sony. This resulted in a shifting of much of the XM sales away from traditional car audio towards plug-and-play. Only Pioneer has offered direct tuners, while Alpine has been out of stock for six months and Sony for over a year, said retailers. At press time, the long-awaited initial shipments of Sony XM smart cables were filtering into some stores.

Crutchfield said it had over a hundred pre-orders on its Web site for the Sony smart cables, and they are currently selling well. As for receiving the Pioneer, Kenwood and Alpine cables, Carl Mathews, senior director of mobile merchandising, expressed the common view, claiming, “The dates have been pushed back so many times that I'll believe it when I see it. It's been over six months. They were expected before Christmas last year at one point.”

XM said that as smart cables become available, car audio will gain up to a 30 percent share of XM's aftermarket sales, vs. plug-and-play and home audio, according to Dan Murphy, senior VP, product marketing and distribution.

He also said that the success of plug-and-play tuners has created a resurgence in the boombox market. “Some retailers are telling us we're the savior to the boombox business. With products such as the Cambridge Soundworks piece at $200, we're exceeding the average price of a boombox and generating business.”

Sirius' answer to the XM Direct universal tuner system is the new Sirius Connect tuners, the first of which will be available for Alpine this month. As for tuners for other brands, Law said Kenwood will transition to a Sirius Connect tuner when its SR903 inventory is out of stock. “Clarion is staying with their current piece through the end of the year, and we've announced JVC will be coming on the early part of next year,” he added. There are no current plans for a Sirius Connect tuner for Panasonic, Law said.

In other new satellite radio products, Kenwood is planning a Sirius plug-and-play tuner to replace the current KTC-H2A1. The unit is expected to offer a better display, increased flexibility and a new design with shipping in the fourth quarter this year.

Eclipse is also planning to offer Sirius capability on most of its 2005 head units, which are expected to ship in February 2005.