Have You Noticed It's Costly To Run A Bunch Of Satellites? XM Has...

from the ain't-so-easy dept

From the very beginning of satellite radio, I was skeptical of its potential. While I admit I was wrong about the number of people it would appeal to, my bigger issue was with the cost structure of the business. Launching and maintaining satellite is extremely expensive. Just ask anyone who worked on Iridium or Teledesic. Even if you can sign up a lot of users, the capital costs are tremendous. If the costs of getting those subscribers is high, then it's a definite recipe for trouble. So far, Sirius and XM have been able to keep kicking, mainly through a ton of investment money and the promise of future potential profits -- stacked up against continued losses. It looks like a few are finally doing the math on all of this and realizing that the satellite radio business, as much as some people like it, may not be sustainable. XM posted wider than expected losses today, blaming higher than expected customer acquisition fees -- suggesting that, for all the good press, not as many people as expected have been rushing to sign up. Also, one of the company's directors resigned, citing a "crisis on the horizon," which is anything but inspiring.

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  1. identicon
    Joe T, 17 Feb 2006 @ 7:23am

    No Subject Given

    XM would probably fare better if they spent less time on signing up big names and content (Oprah and MLB come to mind) and lower the subscription price a tad to undercut Sirius. While I emotionally love that they have MLB, I have to admit that the number of games I hear in the car is low; and I'd rather be watching them on TV.

    What I do love about XM is the fact that I can always get my favorite station, no matter how far I drive; the fact that news, traffic, and weather are always available; and the fact that no matter what genre I (or my passengers) might want to listen to, it's there. My dad just picked up a Roady and plans to use it in the car, at home, and on the boat - and couldn't be happier.

    What dismays me is the fact that when you buy a new car, several manufacturers only offer one or the other - not a choice. My new Jeep will only offer Sirius - and I can't replace the head unit lest I lost several vehicle features that use it - and so I will listen to it for my free year, and if I can't figure out how to get XM on it (there may be an aftermarket solution that wires right into it), I may wind up staying with Sirius.

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