by Demian Russian
During a discussion about Satellite Radio 2.0 on last month’s Satellite Radio Round Table, I predicted that Sirius XM Radio (NASDAQ:SIRI) would eventually migrate to a single platform over time — the XM platform. I speculated that Satellite Radio 2.0 would be an XM product exclusively and would offer further clues about this eventual migration to a single platform. One of the first clues was the release of the SkyDock as an XM only product last year. Another clue followed when production of the Sirius Stiletto portable ceased a few months later. Sirius XM upgraded the XMp3 portable XM unit to the XMp3i, but there was no replacement for the Stiletto Sirius portable.
I can now report yet another clue. Sources familiar with the situation are now confirming that all production of Sirius dock and play radios has now ceased. This end in production of all Sirius dock and play radios includes the Sportster 5, Starmate 5, and Stratus 6. According to sources, all production of these radios ceased sometime last month. Inventories of these radios have been historically low over the last several months — especially for the Stratus 6, which supports Sirius “A La Carte” programming packages. The remaining inventory of these radios should dwindle pretty quickly, especially going into the holiday shopping season. Without any new Sirius product on the shelves this coming holiday season, there could be a stronger retail push for XM product, such as the XM OnyX dock and play and XMp3i portable radios.
This last March, Lazard Capital Markets senior media analyst Barton Crockett reported on a series of investor meetings hosted by Lazard with Sirius XM’s CFO David Frear. During the meetings, Frear spoke of the potential opportunity to consolidate the currently separate Sirius and XM service platforms. Frear discussed the possibility of only the XM platform being installed in all new cars. The majority of new cars which have satellite radio installed have an XM radio, so this would make sense. Also, XM’s terrestrial repeater network has a much wider footprint than Sirius’ repeater network, and it could also be argued that XM’s compression technology is superior to that of the Sirius platform. Frear noted that some of this single platform migration potential depended on talks with the automakers, but he saw a scenario where the Sirius platform could either be used for new services or sold.
During Sirius XM’s second quarter conference call, CEO Mel Karmazin announced the company’s plans to roll out “Satellite Radio 2.0″ in retail stores by the holiday season in the fourth quarter of 2011, but Karmazin also stated, “We will obviously be rolling this out to OEMs — as soon as they’re able to incorporate it into their production schedule.” In response to a question from Lazard Capital Markets senior media analyst Barton Crockett to elaborate further on Satellite Radio 2.0, Karmazin went on to say that Satellite Radio 2.0 was “going to provide for us to have more capacity, which would mean more channels and more offering, as well as more functionality.” With the production of all Sirius dock and play radios now ceased, it appears that Sirius XM is beginning to clear the way for Satellite Radio 2.0.
Position: Long SIRI
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Link: Sirius XM (SIRI) Ends Production Of All Sirius Dock And Play Radios | Satellite Radio Playground