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XM To Attract Subcribers With Lower Pricing


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#1 of 10 OFFLINE   Ronald Epstein

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Posted December 18 2005 - 04:09 AM

XM To Attract Subcribers With Lower Pricing
Maya Roney, 12.15.05, 12:42 PM ET

Bear Stearns research analyst Robert Peck said he expects XM Satellite Radio to continue to gain subscribers in the fourth quarter due to its upfront cost, which is lower than that of competitor Sirius.

"Contrary to some expectations that Howard Stern would completely skew market share in Sirius’ favor in the retail market this quarter, we find that XM is holding ground primarily due to the lower priced radios," wrote the analyst in a recent research note.

The research analyst maintained an "outperform" rating and $40 price target on the stock. XM’s (nasdaq: XMSR - news - people ) strategy this quarter is not spending on advertising, but focusing its marketing efforts on reducing the receiver price where the marketing dollar immediately translates into a subscriber.

"While a die-hard Howard Stern fan or a core football and basketball fan may take Sirius regardless of the receiver price and irrespective of how much advertising XM does, the undecided consumer could very well take XM because of the lower upfront cost," said Peck.

The analyst feels confident that both XM and Sirius (nasdaq: SIRI - news - people ) will be able to meet his expectations as they continue to add subscribers at a rapid pace throughout the fourth-quarter.

"Current valuation levels present an attractive entry point for the long-term investors," he said.

http://www.forbes.co....rtner=yahootix

 

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#2 of 10 OFFLINE   Brent T

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Posted December 18 2005 - 11:48 PM

As a satelite fan this worries me a bit.

I have been a business owner for over 20 years and as soon as we see our competition lowering their prices we know there could be some problems for them. Lower prices mean lower profits. While it looks good on the outside to attract a new customer base it also means that less money is going into other aspects of the company which is what a new enterprise like satellite radio needs. XM isn't attacting people who werent interested in satellite, they are attracting people who already made a decision to get a service.

Having owned both systems I would rather see each company continue to add exclusive content (which is pricey). People will not come to satellite radio because its 2 bucks cheaper a month then the other company.

People will come to satellite radio for content. Each company should be concentrating on taking customers from FM radio and not starting a price war between them. They aren't at that point yet IMO.

I think if you look at these two companies and compare them to cable (pay tv which many thought would never work) you are looking at a Showtime vs. HBO and we all know who spends more money on exclusive content and who charges more.

#3 of 10 OFFLINE   Dan Joy

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Posted December 19 2005 - 12:53 AM

Quote:
People will come to satellite radio for content. Each company should be concentrating on taking customers from FM radio and not starting a price war between them. They aren't at that point yet IMO.


I choose XM due to the lower monthly rate last year. All things considered, they were pretty equal to me when I chose. I originally got satellite radio for music, so Stern, NFL etc.. was not a factor. Now, I find myself switching from sports to O&APosted Image

I think the lower priced radios will help!
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#4 of 10 OFFLINE   TheLongshot

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Posted December 19 2005 - 04:12 AM

Quote:
People will come to satellite radio for content. Each company should be concentrating on taking customers from FM radio and not starting a price war between them. They aren't at that point yet IMO.


Ah, but lower barriers of entry will help with that. Lowering the price of receivers makes it easier for people to make the jump. Meanwhile, adding expensive exclusive content (rather than cheap exclusive content) may get a chunk of people in, but will it keep them if that's the only thing they signed up for? Will it be added value for those who are currently signed up?

Anyways, the story isn't about XM lowering anything, just that XM is less than Sirius per month, and equipment costs are less, which gives XM an advantage there. I also think XM has an advantage in content, but that's IMO.

Jason

#5 of 10 OFFLINE   MarkMel

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Posted December 19 2005 - 06:35 AM

You get what you pay for.


The above is all in fun and there's room for more than one content provider. It's better to have a choice. (I chose Sirius)

It reminds me of when Lucy/Ricky went into the diner business with Fred/Ethel and they kept lowering the prices on their food to get the sale.
"and no one seems to understand the glory of guitar, when out of tune, the off timing, the singers who can't sing, - the beauty of flaw!"

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#6 of 10 OFFLINE   Ronald Epstein

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Posted December 19 2005 - 09:00 AM

Quote:
You get what you pay for

That's not true in this case.

XM has had their act together long before Sirius
did. Trust me -- Sirius was a mess for a long
time with investors having more control over
the music that got played than the listeners and
DJs.

To this day, Sirius music playlists are awfully
shallow. They have an FM radio mentality which is
fine for people that just want the same "hits" played
24/7.

It's all a matter of taste when it comes down to
either service but it's certainly not a matter of
"getting what you pay for."

 

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#7 of 10 OFFLINE   Phil Iturralde

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Posted December 19 2005 - 10:51 AM

Nicely written Ron!

I ventured into XM by purchasing my 2005 Honda Accord 4 cyl. AT EXL PZEV Sedan last May!

After living w/XM for a week, getting a home unit was a no-brainer! So, ... I bought the XM SkiFi2 & Home Kit from eBay, and subscribed for 3-years ($9.99 a month)

The promotion at the time was buy a SkiFi2, subscribe and get a FREE Delphi Roady2 w/Car kit! (3-month sub required - family plan @ $6.99 a month)

The Home Kit I bought for the SkiFi2 works with my Delphi Roady2 unit so I listen to XM @ work!

When my 3-month FREE XM access expired on my 2005 Honda, I just added that XM car radio to my family plan!!!

Favorite stations is:

Watercolors - XM 71 - 100% Commercial-Free (Jazz)
Radio Classics - XM 164 (Green Hornet; Shadow; Suspense; etc.)
E! Entertainment Radio - XM 162
Laugh USA - XM 151

The XM SkiFi2 / Roady2 works great with my Home Kit @ my vacation house up in the mountains (3,800 ft level off HW88 - 45 mins. to the Kirkwood Ski Resort) where most radio & TV signals are very weak! If we take our 2004 Honda Pilot w/NAV up to the snow, I'll setup the Roady2 Car Kit!

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#8 of 10 OFFLINE   MarkMel

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Posted December 20 2005 - 02:35 AM

What would be cool is if satellite radio was set up like cable and the satellite companies were set up a content providers and you could pick the channels or plans that you you wanted. I'm sure that there are programs I would like that XM offers and I'm sure there is programming from Sirius has the XM subscribers would like.
"and no one seems to understand the glory of guitar, when out of tune, the off timing, the singers who can't sing, - the beauty of flaw!"

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#9 of 10 OFFLINE   Michael Harris

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Posted December 24 2005 - 10:34 AM

I finally got XM last month when I faced a 7.5 hour drive from DC to Columbus OH on Thanksgiving. Having taken that drive numerous times, I knew that regular radio just did not cut it.

I have a BMW X-3, which was pre-wired for Sirius. I bought the Blitzsafe XM adaptor along with an XM Direct. Installation was pretty easy and I have full use of my headset and steering wheel controls. With one very small exception, it looks like it came with the car.

Upon receipt and installation of the unit I activated it and found to my surprise that there was a $50 rebate for XM Direct. Overall, a great deal.

BTW, I chose XM because of its classical programming. A lot of their programmers are late of NPR and WETA radio.

#10 of 10 OFFLINE   Ronald Epstein

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Posted December 24 2005 - 10:43 AM

Michael,

Thank you for sharing your experiences.

It seems you really made out well with that
Blitsafe adapter. I had been looking to get
one myself when I owned my older car that had
a Sirius tuner -- but at the time, they were
only making those adapters for BMWs.

 

Ronald J Epstein
Home Theater Forum co-owner

 

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