Satellite radio rivals XM and Sirius united at CES to proclaim the new format a smashing success, while also extolling the virtues of their individual systems.
XM said that satellite radio is the fastest growing audio technology in over 20 years, winning over 30,000 subscribers, according to XM president and CEO Hugh Panero.
“Will people pay for radio?” asked Panero. “The answer is a resounding yes. In the first 60 days of national sales, it’s far outsold other top consumer electronics products including DVD, DSS and Compact Disc,” he said, noting the results are all the more significant given the tough retail climate and post-Sept. 11 launch of the format.
XM hardware providers Alpine, Pioneer and Sony will jointly produce 50,000 XM units a month as of March, he added. Audiovox announced at CES that it will supply both XM and Sirius car radio. The XM unit will be an RF modulated universal tuner, which it claims is the only unit to offer direct access to each of the individual XM stations by inputting the station number. The unit is expected to ship in February at a suggested price of $299 with XM-capable head units to follow in April and May. There were no details about the two Sirius head units, but they are expected to ship in early spring. Audiovox said it will also offer an XM glass mount and roof antenna.
In addition Alpine said it will begin offering a universal add-on XM tuner RF adapter which will work with any radio to deliver XM service. It ships at the end of February at $80 and it requires a separate XM tuner and antenna.
For its part Sirius claimed it will not be far behind XM’s launch. Sirius president and CEO Joe Clayton announced that a fourth market, Jackson, Miss. will be added to the initial three areas (Denver, Houston and Phoenix) scheduled for deployment on February 14. Jackson, Miss. is significant, said Clayton, because it was the first market in the launch of DSS via the local Cowboy Maloney’s chain. (See related story on p. 6.)
Drawing heavily on his experience at RCA, Clayton explained, “We’re going to launch our product in a very similar manner and in similar markets as we did satellite TV.”
Sirius plans to expand its service to Little Rock, Ark., Albuquerque, N.M., Dallas-Fort Worth, and Tulsa, Okla., in the April time frame, followed 45 to 60 days later in Indianapolis, Ind., Nashville, Tenn., and Miami and Tampa, Fla. The national rollout is expected in July or August.
Clayton said he is not worried about XM’s lead to market because “there’s not enough awareness on this product yet to make a hill of beans. It didn’t hurt RCA being behind Sony in launching the VCR so I’m in pretty good company.”
Clayton also said Sirius’ promotional strategy will differ from that of XM, focusing on grassroots promotions and different regional strategies.
“Contrary to my competitor, we don’t believe there’s a one size fits all approach to this. We’ll have different consumer offers, different creative and different media for different markets and we will test different pricing,” Clayton said.
One market will offer service at $12.95 per month while another will offer three months free when you purchase a full year’s subscription, effectively reducing the price to below $10, he said. The company will also test a $50 factory rebate on Sirius hardware in some markets.
Sirius also announced the programming lineup for its service will include 60 channels of commercial-free music and 40 channels of news, sports, talk and entertainment. Sirius will offer distinct channels for top hits in rock, Top 40, country, R&B, RAP and Dance.
Several of Sirius’ hardware providers including Jensen and Kenwood are also already making plans to release home and portable satellite radio products to complement the car introductions.
In other announcements, Sirius said it is investing heavily in grass roots promotions to build awareness. The company will produce a 65 foot ferris wheel with real demo cars hanging from it (instead of seats) in which consumers can hear the service. Also available for store and event promotions is a 50 foot tractor trailer which opens up to a reveal a stage with a live DJ booth. Sirius has also joined the NASCAR racing team run by Ray Evernham and will be the primary sponsor of the No. 7 Dodge Intrepid R/T with Casey Atwood as the driver.
Clayton noted that 20 million viewers watch NASCAR racing every Sunday and the Winston Cup series, in which the No. 7 car will be racing averaged more than 5 million viewers per race.
The company also launched a new Web site during CES that will offer live streaming audio of its 60 broadcast music channels.
XM’s Panero commented at CES that he would like to see the price of car hardware fall to $200 and that this would significantly improve sales. Pioneer VP product planning Keith Burnett said, however, “You won’t see any price moves until 2003.” Currently, the most inexpensive universal solution for XM is a $250 Pioneer RF tuner plus a $70 antenna.