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Karmazin Discounts iPod Impact

9/16/2010 08:41:23 AM Eastern
Newport Beach, Calif. - The rising number of vehicles equipped at the factory with iPod/iPhone connections isn't cutting into satellite-radio subscriptions, Sirius XM CEO Mel Karmazin told investors here at a Bank of America conference.

He also told the conference that the first Sirius XM 2.0 radios will be available in the aftermarket in the fourth quarter of 2011, offering subscribers "more content and more functionality" to "provide more stickiness."

Although he didn't divulge details, Karmazin likened the launch of 2.0 to cable-TV's evolution from offering basic service to on-demand content and pause and skip capabilities.

From the automakers, "reaction is great," he continued, but "it's a question of how quickly they can get it out." It usually takes three years for a new technology to become a factory-installed technology, he explained.

Referring to competition from iPods and other portable devices in the car, Karmazin said there "has not been any impact" on the conversion rate from trial to paid subscriptions in vehicles with both factory-installed satellite radio and factory-installed iPod/MP3 player connections compared to new cars with only satellite radio.

He also pointed out that people who have satellite radio in the car spend far more time listening to satellite radio than to other content source when they're on the move. Karmazin pointed to an Arbitron study of consumers, conducted in October and November of 2009. It found subscribers spend 71 percent of their time listening to satellite radio and only 17 percent to terrestrial radio, 7 percent to CDs, and 5 percent to such mobile devices as cellphones.

In other comments, Karmazin said:

  • the household penetration rate of satellite radio is about 15 percent of 110 million homes, indicating plenty of potential for growth;

  • 85 percent of gross adds come from subscriptions in new vehicles;

  • 60 percent of new cars sold in the U.S. are equipped with satellite radio;

  • and opportunities to reactivate the subscriptions of factory radios in used cars will represent a "tremendous opportunity" in about five years because of the growing penetration of factory-installed satellite radio.
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