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Sirius Launches In Four Markets

2/25/2002 02:00:00 AM Eastern

Sirius Satellite Radio finally launched its service in four markets on Feb. 14, marking the end of a year-long delay and the beginning of a competitive market in satellite radio.

According to Sirius CEO Joe Clayton, between 500 and 1,000 people lined up at Cowboy Maloney's here, the primary launch site, to hear demonstrations of the service. "That's more people than we had waiting with satellite TV," said Clayton. He also noted that the store expected to sell 25 to 50 Sirius units on opening day alone.

For the first weekend of the launch Audio Express, Phoenix, Ariz., said it sold over 20 units at one key store and claimed consumer reaction was very positive.

Merchandise manager Paul Goswiller said weekend events attracted at least 2,000 people. Sirius' 50-foot demo tractor trailer, which features four demo cars and live DJ booth, was particularly useful in promoting locally, he added.

In all, 200 storefronts participated in the Sirius launch here, and in Denver, Phoenix and Houston. Sirius-ready tuners and antennas began trickling into stores this week, with both Ultimate Electronics and Audio Express saying they received either Kenwood, Jensen or both brands of tuners in time for the launch. Clayton said that a total of 10,000 to 15,000 Sirius products were now "in the field."

To kick off the launch, a concert was held at Cowboy Maloney's on Feb. 13, where 400 to 500 guests, including the mayor and state government officials, were treated to a concert by Randy Travis, Earl Scruggs, Tom T. Hall, Tracy Lawrence and Rhonda Vincent & the Rage.

Clayton expressed unyielding optimism for the success of the product, claiming, one hour after the launch, "This has exceeded my wildest expectations. The retailers and the customers are excited, so I think we're off to a great start."

Sirius, however, is off to a late start, almost a year behind its competitor XM Satellite Radio. In addition, Sirius' aftermarket partners enjoy only half the market share of XM's partners. According to NPDTechworld, Port Washington, N.Y., Sirius partners Kenwood, Jensen, Panasonic and Clarion have a collective market share in unit sales of approximately 22 percent compared to XM partners Pioneer, Sony and Alpine at 47 percent for 2001.

"We'll be signing additional car stereo manufacturers and those negotiations are taking place right now," Clayton said. "I fully expect that gap to be narrowed. In fact, any smart car stereo manufacturer will want to represent both services."

Sirius' promotional strategy differs from XM's in that it is offering different promotions in different markets. These include a money-back guarantee in Jackson; a $50 rebate on hardware in Denver; and three months free service when you buy a year's service in Phoenix. No special promotions were offered in Houston.

Retailers said they were excited about the launch of a second satellite service and they expect the added publicity and competition to stimulate sales overall.

"I think it will help the category," said Audio Express' Gosswiller. "I'm hoping to hit 20 to 30 pieces per month for Sirius and XM combined. Now you have two companies talking about it so there's a debate and now you wonder what's the difference. One has a satellite in a different position and one charges a bit more. You demo the different stations. I'm not going to push one over the other."

Most Sirius suppliers began shipping product just days before the event launch. Kenwood is offering a Sirius tuner at $200 plus an $80 roof-mount antenna. The company's new 2002 line also includes 10 Sirius head units in the standard line plus six Excelon models and a DVD player. The company plans to deliver an RF modulator unit in July at $100 that will work with Kenwood's Sirius tuner module to interface with any aftermarket or OEM head unit.

"So far it seems like it's going smoothly. The retailers are getting the displays up and in place. They probably had some experience with XM and so they know a little about what was required. So I expect it will be smooth," said Bob Law, VP sales and marketing.

Clarion said 200 to 300 tuners were scheduled to arrive at retailers in the days following the launch. The tuners work with the company's four Pro Audio Sirius-ready head units plus an in-dash DVD. The tuner has a suggested list price of $249 and an FM modulator version is $349. The company is also offering a roof-mount antenna at $99.

Jensen is shipping the SSR2000 system that includes a Sirius tuner that works a DCU2000 display/controller module or the Jensen SR4510 head unit which ships later this year. It will also work with any unit via auxiliary jacks or FM modulator. Suggested retail price for the tuner and display/controller is $249. The company will also ship in the second quarter the SRP2002 Plug N Play system, which plugs into the auxiliary inputs of a car radio and a Sirius portable boom box in the third quarter. Also in the future, Jensen plans to offer a Bluetooth Wireless upgrade Kit for the SSR 2000 universal add-on Sirius tuner.

Terk said it was shipping Sirius roof-mount antennas at $79.95 with glass-mount units expected during or after May.