XM To Introduce Wearable Satellite Radio

Although XM is remaining mum on what it will be announcing at its press conference today, the buzz about a portable device began last week when a research note authored by Kit Spring, an analyst in the Denver, Colorado office of Stifel Nicolaus & Company, predicted a "wearable device" would be unveiled this week.

Beyond Autos

When contacted by TechNewsWorld, Spring declined to further comment on the subject. "I don't have any comments except what's in the published document that I wrote," he said.

Other observers of the sat-rad scene, however, were less taciturn about the potential of a portable device.

"The introduction of a Walkman-like device would open a new dimension to XM's marketable footprint beyond vehicles, boom-boxes and home use and into the general population," Maurice C. McKenzie, an analyst with Friedman, Billings, Ramsey & Company in Arlington, Virginia told TechNewsWorld.

The Third Context

An XM portable device would be a significant step for satellite radio, according to Ross Rubin, director for industry analysis for the The NPD Group in Port Washington, New York.

"This represents not only the third context in which people listen to music, but really the only segment of the market that's been growing for the past two years, primarily due to the success of the iPod," he told TechNewsWorld.

"Based on XM's past," added April Horace, an analyst with Janco Partners in Englewood, Colorado. "I'm sure the device is going to have great consumer appeal and will continue to drive subscribers."

"XM has about 2.5 million subscribers today, and I think the wearable device -- if it has recording capabilities -- will be going head to head with the iPod and any of the other new devices that are coming out," she told TechNewsWorld.

Threat to iPod

According to Rob Enderle, president and principal analyst of the Enderle Group in San Jose, California, a satPod could be a potential competitor to digital music players because it's going after the same market segment.

"It's a threat to the iPod market because it's going after the same customer -- a leading edge customer who wants to listen to their music on the go," he told TechNewsWorld.

"They're probably going to have only one device that they're going to prefer to carry," he continued, "and if its the XM radio, then the iPod loses a seat."

Priced To Sell

In vying for ears, any portable satellite radio device will have to be priced right -- something experts agree won't be a problem for XM. "It's a subsidized device so it could be the same price or less, depending on the subsidy," Enderle said. "So it should be aggressively priced."

"The company hasn't commented on where pricing will be, on what their exact positioning of the product will be, " observed McKenzie of Friedman, Billings, which is a "market maker" for both XM and its competition, Sirius. "But my expectation is that it should be positioned against MP3 players and it should be priced accordingly."

In the pricing realm, XM actually should be thanking Apple (Nasdaq: AAPL) and its colleagues for their ability to raise the bar for what people have been willing to pay for music hardware, maintained NPD's Rubin.

"MP3 players have taken the price of portable audio to a price that was unheard of just a couple of years ago," he observed. "So fortunately for XM that price ceiling has been raised by the iPod, and it gives them some flexibility on pricing."

He noted that XM's attitude toward hardware is different from Apple's. "Unlike Apple, which has the iPod as a significant revenue stream and makes a small margin on the songs it sells through its music store," he said, "XM's business is a continuous subscription business, so they're going to want to price the device aggressively."