By Brandon Matthews
Imagine that you’ve worked all day long. It begins to rain hard as you make your way to your car in anticipation of going home after a brutal day at work. You arrive at the place you recall leaving your car that morning, only to find out that it is gone. The police inform you that they will do their best, but we all know what that means. We’ve all seen COPS. The story at best will not end well for you in most cases.
Sirius XM Radio (SIRI) recently launched a new high powered satellite into orbit. Reports are already coming in that Satellite Radio signals are being picked up in places that they never were before; in basements, in garages, under trees and overpasses. With this in mind, I looked for information regarding the newest addition to Sirius XM’s satellite constellation. Funny thing about a 10Q filing is that it can read like a bible; always providing a different message depending on what the reader seeks to find. I must have passed over this little gem a dozen times:
“We will incur significant capital expenditures to construct and launch our new satellites and to improve our terrestrial repeater network and broadcast and administrative infrastructure. These capital expenditures will support our growth and the resiliency of our operations, and will also support the delivery of future new revenue streams.”
That last line cannot be ignored. Ongoing speculation has been that Sirius XM’s newest technological wonder dubbed Sirius FM-5 may offer anything from an On-Star type of product to GPS offerings. Still others look at the potential of mobile television. I would like to suggest a different and more practical approach that can be instituted nearly immediately by the company.
One of the most antiquated systems in any vehicle on the road today are the theft deterrent systems. Most are useless in that they require the vehicle owner to take some kind of action, from installation to simply activating the alarm. People become complacent, and the stolen car industry thrives. I suggest that Sirius XM’s technology places the company in a unique position to offer a new and improved version of LoJack. A nationwide tracking system that can aid law enforcement in the immediate location of any stolen car on a nationwide scale, producing immediate results.
As for the likelihood of such a new potential revenue stream becoming reality, we need to look at past endeavors. Experience teaches us that Sirius XM develops new products primarily at the urging of their OEM partners, such as “Back Seat Television” developed at the request of Chrysler, or the Ford (F) SYNC system now available in Ford vehicles. On Star in fact already offers this feature, but its exclusivity to General Motors (GMGMQ) provides an exceptional opportunity for Sirius XM to offer a competing product or service and in my opinion, provides the incentive to do so.
Position: Long SIRI
They should be doing this and MORE. So much potential….so little action.
About the back seat television. I remember seeing Mel talk about it in an interview and he basically said when others came to him about it, he didn’t see the reason for it. I trust Mel. His knowledge of radio is without peer…but the dude needs to think outside the box and have real vision. He’s a great radio guy and a killer negotiator….I just hope he’s surrounding himself with a lot of other visionaries who have perhaps more insight into other areas and ideas like the internet and what Brandon is talking about here with the gps and tracking system.
On that note…hey LOOK…Sirius is at .41 cents and rising.
Excellent as usual Brandon!
This article only highlights and reconfirms how IMPORTANT it is for Sirius to EVOLVE into something MORE than radio. Radio alone isn’t cool anymore. Look what happened to terrestrial radio. Sirius one upped them by becoming commercial and censor free. Cool. But not ENOUGH. That is why Slacker and Pandora have stolen alittle thunder from them. Sirius has a real revenue and earnings growth model compared to them. All Sirius has to do is mimic their service by providing the ability for people to create their own radio stations and they’ll steal those people back. Sirius has the content. They’ve got the platform. They have the technology. They are poised to be SO MUCH MORE than just radio. They need to explore and include these options….so that when people think of music discovery, info, radio in the car, sports, talk, video and GPS they think of Sirius.
Sirius can be the one stop shop for all things radio, audio and video entertainment in the car and on their iphone etc. There is so much potential here for them to be the MUST HAVE “COOL” item. I only hope they capitalize on the moment and run with it.
Another “outside the box” article by Brandon. Keep it up Brandon and Sirius!!! Please, please more PR, please!!!!! PUBLIC RELATIONS… more of it. I beg of you.
Brandon,
Bingo, I have said this before. What SiriusXM needs to do is get the insurance companies on board. They can offer insurance premium discounts to all equipped cars.
@Paul
The insurance companies have and do offer discounts..Get a 20% discount on my comprehensive/collision because i have on-star with my GM Trailblazer along with XM best of..it unlocks my car if keys inside and if stolen can be neutralized and shut down along with lojack type sat finder device built in,and every car made since 2005 has a little black box in it for this purpose,just like black box in Airplanes,if an accident can be accessede to derive all kinds of info,were seat belts on,speed,when were brakes hit so forth…
@johnnyirishxm
Forgot to mention the price is $14.95 a month and also get hands free phone linked to my Verizon phone and Vehicle diagnostics monthly report.
Great insight Brandon into such a possible avenue for growth. This alone could be a game changer for Sirius XM. With sat radios being installed more and more in new vehicles there needs to be an industry wide “On Star” system standard and Sirius could just be the product that can tie it all together. As Johnnyiris mentioned the insurance discount, thats a very positive thing to offset the monthly sub costs of such technology add-ons.
Sirius needs to get BUSY….npr just released their own iphone app. Check it : http://www.publicradioplayer.org/
That actually sounds like a good idea…stolen vehicle tracking. Imagine the next time an “Amber Alert” is broadcast and the thief is in a Siri equiped car….I guess the only question is, just how many cars are stolen each year
Spot on! I have been thinking the same way for several years now. When my buddie’s sat radio was stolen I asked if it was trackable. They said NO. These are definatly some ideas to pursue and capitalize on!
I just saved a bunch of money on my car insurance by switching to SIRIUS
Hate to be the buzzkill, as I often am on this site, but Sirius is not in a position to explore strategies outside of its current business model. Why? Because it requires a lot of capital, and Sirius needs its money to fund current operations. Mel said it himself a couple quarters ago….something along the lines of “we could put satellite radio in a toaster too”, but they are not pursuing anything unless it creates positive cash flow. It’s like building a house you can barely afford, and halfway through you decide to throw in a swimming pool. Finish the house first, then talk about upgrades. Wait till Sirius becomes profitable, then talk about these skies-the-limit strategies.
I have to agree with Brad here. Sirius XM needs to concentrate on their core business of delivering premium content to subscribers, and I think they are actually smart enough to know that already.
My guess is that the new satellite is more about improving signal quality and making other technical improvements that could result in better a better use of their allocated bandwidth, resulting in better sound quality (their over-the-satellite sound quality is pretty sub-standard right now).
Right now, they are broadcasting the same exact information (of the most popular channels) on both systems because of technical limitations caused by having two incompatible systems (Sirius and XM). Their long-term plan needs to include technical changes that will correct this problem, because once it is corrected they will be able to free up bandwidth, and be able to broadcast with higher sound quality (or more channels, which would NOT be my choice).
XM already provides spectrum for ON/STAR. Maybe GM can provide the same service under a different name to other car manufacturers. If so, SiriusXM can incorporate this service with minimal capital expenditure. The satellites are the biggest part, which they have. GM has the ONStar infrastructure that could be utilized for other manufacturers.
@Brad
Brad…you do realize these are Sirius XM’s own words and not mine, don’t you?
“…These capital expenditures will support our growth and the resiliency of our operations, and will also support the delivery of future new revenue streams.”
Agree with Brad, XM/Sirius needs to stop paying for expensive “talent” like Rosie and Howard and most of those tired DJ’s, try to improve their programming and make a PROFIT before dumping even more money into their big black hole. Their programming has gone from marginal to sucked. Why would anyone with a lick of business sense devote channels to Springsteen or Metallica at the expensive of bumping entire music genres like progressive rock. Slacker radio has it right AND they have a prog channel with 180 bands, most of which are no longer heard on XM. Cuz….we all know…the world just NEEDS 24 hours of THE BOSS!!!! Aaaaahhhhh! And on Slacker, we don’t have to put up with those “cool” DJ’s that come steps closer to reverting things back to that hidious KLOS…..Blaaaaaaaaahhhh! (Dylan and Petty…you guys stay…) Outside the box? use that big-ass satelitte to set up a standard service and a premium XM/internet hybrid service…and…offer a block of channels to everyone with commercials on the half hour for….FREE. They can then entice the freebee’s to convert to pay. Probably don’t have the bandwidth, because they are probally busy planning a second channel for….the BOSS!!!!! AAAAAAHHHHHHHHHHHH!
Why Not Just rent the Sat
You don’t believe that GPS is a form of content? A acive system would incorporate well with SiriusXM’s other content, premium music, talk, weather, and traffic, and back seat video.
@Sam
GMGMQ is no longer a valid ticker….
Whats with the huge sell off today? Perhaps I was right when I predicted that Sirius wouldn’t follow it’s usual pattern of running up before earnings and THEN selling off. I felt that this time Sirius would sell off leading to earnings and then slowly climb back up after earnings. How fast depending on what is said.
Could this be the beginning of a sell off that will push the stock down to the low 30s or high 20s?
I am glad I didn’t buy more today. I think the quick pop to .42 was a head fake to get people to buy now.
I am going to watch how low it goes before the earnings call and buy when I think we’ve hit the bottom.
The quarters going ahead should keep improving, so I feel any drop in price now will be a solid bottom and a good safe bet to average down even more.
It’s frustrating yes….but after 4 years, I’m kinda used to it with this stock.
Good luck to all.
Bubba…you do know we have a forum where we have been discussing this in detail for two days now, right?
http://www.satwaves.com/forum
Look for the daily stock thread
http://www.satwaves.com/forum/viewtopic.php?f=64&t=936
The first sentence is what catches my eye and cause some concern “We will incur significant capital expenditures to construct and launch our new satellites …”
Yeah, I know. But you’re creating hype out of one line buried in the text (which of course they would write) and wildly speculating about some new idea to generate business. Every other day on this site it’s something new: Sirius should recreate Pandora! Partner with the military! Create a theft deterrent system! Blackberry apps! and on and on. It may be fun to think about, but the ideas are unrealistic.
In my opinion, they need to stick with their business model, quit burning cash, and focus on profit.
Look at Apple. They have $30 billion in cash. Think of all the things they “could” do. But do they? No. They focus on their model, and don’t try to be all things to all people. @Brandon Matthews
What is so unrealistic about Sirius creating a Pandora/Slacker like addition to their internet app? If they did that, they’d have the BEST of both worlds. There would be no reason to choose Pandora or Slacker when Sirius would have it all. The ability to create your own radio stations AND all of Sirius’s unique live content.
Doing this wouldn’t cost anything and would indeed IMPROVE their model. IMHO.
@Brad
Creating, then writing about these new ideas shows the optimism that Brandon and other folks have for the company. None of these ideas are unrealistic (well, maybe the military thing), and are practically right in line with what SIRI is trying to do – entice potential customers to put SIRI in their cars and therefore make $$. I for one love options, and if SIRI would have had their system set up with a Pandora/Slacker-like service, as well as an Onstar option, I would have bought them a long time ago. A one-stop-shop is perfect for modern Americans.
Brandon, this could be a fantastic money stream. Not only can this work with autos & trucks, but do you know what the market for this type of device for machinery such as bulldozers, backhoes, skidsteers(Bobcats)etc. They are stolen from job sites & companies by the hundreds daily across the country! These are big ticket items that cost plenty to insure. If I were a large insurance underwriter I would be on the phone w/ Sirius in a minute. A device that would save me millions a year in pay outs for stolen equipment. I like the way you think, I just hope it can become feasible. Overall how many billions are paid out by the insurance industry in these types of vehicles & equipment. It’s a win win for insurance carrier & customer!
Brad, this is the way I look at it:
If my iphone was just a phone, I would not pay $299 for it.
If my iphone was just an MP3, I would not pay $299 for it.
If my iphone was just a palm pilot, I would not pay $299 for it.
If my iphone was just a mobile internet device, I would not pay $299 for it.
BUT, since my iphone is a phone AND MP3 player AND palm pilot AND mobile internet device, I gladly pay $299 for it.
Sirius XM may not be appealing to everyone as JUST satellite radio, because they can get virtually the same thing much cheaper. Occasionally, they need to add features that go along with the service in order to entice people to subscribe. That is what a LOT of these ideas are… additional methods to entice subscribers. Sure, they have 18 million subscribers now, but with a few extra features, perhaps they add more people at a higher subscription rate. It IS a part of their core business.
I agree with you. The only difference is that Apple was solid financially before developing the iPhone. Yes, you’ve got to invest money to make money, but Sirius has burned too much cash since inception (no need to remind you where we stand with share price), and cannot begin new strategies on ideas that don’t generate immediate cash flow. Our proverbial Sirius backs are against the wall. It’s just not a flick of a switch to start a Pandora-like business or a theft-prevention system.
Personally, I think we all got sucked into this stock from the beginning based on irrational speculation and dreams of being filthy rich. Too much talk of “Microsoft should buy Sirius” and “Sirius has partnered with Apple” and not enough: business growth takes time, expecially in a shitty economy, and the carmakers are struggling, and the loans on Sirius are ginormous, but if you hang in there for the long, long term, there is potential for exciting gains. Just trying to keep it real, man. @Newman
Agree with you Bubba – kinda like…cox cable creating on-demand. The convergence keeps going and the companies that proactively make those plays will win. The frustrating part is XM sits on top of such a bitchen technology, and they just kill it with bad programming and bad business practices. They just will not win until the masses are clamoring over signing up, which means there needs to be something to clamor over. And that offereing will constantly need to remain dynamic and stay ahead of the curve – a tall order…
http://www.onstar.com/us_english/jsp/plans/sva.jsp
How could people be hearing a better signal from Sirius XM after the latest satellite launch when the satellite is still not yet active?